Happy (or Not) New Tax Year!
Chrissy Leach • 7 April 2025
The new tax year began on 6 April 2025 and it's crucial to stay informed about the tax changes that may impact your financial planning.
This year brings several significant tax adjustments, which could affect both individuals and businesses.
Key Tax Changes Effective 6 April 2025
1. Employer National Insurance Contributions (NICs):
- The rate for employer NICs has increased from 13.8% to 15%.
- The threshold at which employers begin paying NICs has decreased from £9,100 to £5,000. This means businesses will incur higher employment costs, potentially influencing hiring decisions and wage structures, ultimately affecting employees.
2. Employment Allowance
- This is an allowance against employers NI and has increased from £5,000 to £10,500.
- It is also open to more employers as you can now claim if your employer NI in the previous year was over £100,000, however, you’re still unable to claim if the only person on the payroll is a director.
3. National Minimum Wage (NMW):
- NMW increased from 1 April 2025 to £12.21 per hour for those aged 21 and over, £10.00 for those aged 18-20 and £7.55 for under 18’s or apprentices.
4. Stamp Duty Land Tax (SDLT):
- The temporary reductions in SDLT stopped on 31 March 2025 so new purchases will be at the higher rates.
5. Business Asset Disposal Relief (BADR):
- BADR is a reduction in capital gains tax for sales of business or company shares (where you’re an employee or director) – various criteria apply.
- The rate has increased from 10% to 14%.
6. Non-Domiciled ('Non-Dom') Tax Status Abolition:
- The government will abolish the non-dom tax regime, which previously allowed certain residents to avoid UK taxes on foreign income. This change may influence the residency decisions of high-net-worth individuals and could have broader economic implications.
7. Late Payment Interest Rates:
- HMRC will increase interest rates on late tax payments to 8.5%, effective from 6 April 2025. This adjustment aims to encourage timely tax payments and ensure fairness among taxpayers.
8. ISA’s
- Although nothing has been announced yet, HMRC are looking at potentially reducing the ISA allowances later in the year.
Tax Rates and Thresholds
The income tax rates and thresholds remain unchanged from previous years rather than increasing in line with inflation which means that people pay more tax as their incomes increase. This is known as fiscal drag.
Implications for Taxpayers
The combination of these tax changes and the effects of fiscal drag underscore the importance of proactive financial planning. Individuals and businesses should:
- Review Financial Plans: Assess how the new tax rates and thresholds impact your financial situation and adjust budgets accordingly.
- Seek Professional Advice: Consult with tax professionals to explore strategies that mitigate increased tax liabilities, such as tax-efficient investments or restructuring income.
- Stay Informed: Keep abreast of tax legislation changes to ensure compliance and optimize financial decisions.
At CJL Accountancy, we are committed to guiding you through these changes and helping you navigate the complexities of the evolving tax landscape. For personalised advice and support, please contact us.
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