Chancellor Rachel Reeves today delivered the largest tax-raising Budget since the early 1990s, with measures expected to raise £26.1 billion a year by the end of the decade.
According to the Office for Budget Responsibility (OBR), the tax burden is set to climb to around 38% of GDP by 2030–31 — a post-war high — while economic growth in 2025 is forecast at around 1.5%. Although the OBR notes that higher taxes can affect economic activity, it has not quantified the impact in percentage terms.
For the £3 billion UK fenestration sector — manufacturers, fabricators and installers of glazing, windows and doors — the Budget represents a challenging shift in operating conditions. The industry is dominated by SMEs, is labour-intensive, and is heavily reliant on private housing repair, maintenance and improvement (RMI) work. While the full extent of the Budget’s impact will depend on how firms and consumers respond, several measures will clearly raise costs or squeeze household budgets.
Employer National Insurance Contributions: the most immediate cost pressure
The increase in employer National Insurance Contributions from 13.8% to 15% from April 2026 will directly raise labour costs, particularly for installation and fabrication businesses where wages represent 35–45% of operating costs. The freeze to the Employment Allowance also reduces relief for eligible small firms.
The precise cost increase will vary by company size and pay structure, but most firms will face a noticeable rise in labour overheads. Businesses may attempt to pass on these costs to customers or absorb them, but either route could put pressure on margins in a sector already characterised by tight profitability and intense price competition.
Income tax threshold freeze: indirect but meaningful pressure on demand
The extension of the freeze to the personal allowance and higher-rate thresholds to 2028 will increase the number of taxpayers moving into higher bands as wages rise. The Institute for Fiscal Studies estimates most households will experience a real-terms income reduction.
For fenestration, where major retrofit projects often cost £4,000–£12,000, weaker household disposable income could delay non-essential home-improvement spending. The scale of this effect is uncertain and will depend on broader factors such as mortgage rates, energy prices and housing-market confidence.
High-value property tax changes: potential cooling at the premium end
New surcharges on properties valued above £2 million, alongside higher stamp duty for the same segment, target a small portion of the market but one that has historically supported demand for high-specification glazing, heritage windows and bespoke premium products.
Developers and high-value homeowners may adjust plans in response to higher transactional and ownership costs. While it is too early to quantify the impact, the premium fenestration segment could see slower activity if high-end housing transactions moderate.
Pension tax relief changes: implications for the self-employed workforce
The restriction of higher-rate pension tax relief on contributions above £2,000 will affect some self-employed installers and sole traders. Any reduction to the overall attractiveness of self-employment comes at a time when the sector faces persistent skills shortages. The degree to which this discourages experienced tradespeople will depend on how widely the new limits are felt within the sector.
Areas of support: useful but limited in scale
The Budget includes £5 billion for affordable housing and an additional £1.5 billion for the Warm Homes Plan, which could stimulate some demand for energy-efficient glazing in both retrofit and new-build contexts. However, these resources will be spread across the wider construction and energy-efficiency supply chain and are unlikely to offset the broader tax-related cost pressures for most fenestration businesses.
Outlook: moderate growth with heightened cost pressures
Before the Budget, industry forecasts — including from the Construction Products Association — anticipated a recovery in RMI and new-build demand from 2026–27, supported by the Future Homes Standard and ongoing energy-efficiency needs.
Post-Budget, the central outlook remains positive for long-term energy-efficient product demand, but short-term growth may be more modest if higher household taxation and business costs weigh on RMI spending and SME profitability. Larger manufacturers with stronger balance sheets and the ability to invest in low-U-value or smart-glazing technologies remain well-positioned. Smaller regional installers and fabricators may face greater margin pressure, potentially accelerating consolidation trends already visible in the market.
Without additional sector-specific support — for example, enhanced capital allowances for energy-efficient products or expanded reliefs for small employers — the next two to three years are likely to present a tighter trading environment rather than the more robust rebound previously expected.
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