As we believe it is crucial for all employers and business owners to be aware of changes in the tax landscape that could affect your finances, we would like to focus today on changes that impact businesses from April 2025. Understanding these changes now can make all the difference in how you manage your business taxes moving forward.

Let’s break it down in simple terms:

Increased Employer National Insurance Contributions.

Starting from 6 April 2025, employers will see their National Insurance rates rise from 13.8% to 15%. The earnings threshold at which employers start paying these contributions will also drop significantly from £9,100 to £5,000, meaning that businesses will pay National Insurance when employees earn £417.00 per month or more.

While this might sound daunting, there’s good news! The Employment Allowance, which allows employers to reduce their annual National Insurance liability, will increase from £5,000 to £10,500. Furthermore, the eligibility threshold will be removed, meaning more businesses can benefit from this deduction.

Corporation Tax stability.

For those of you concerned about Corporation Tax, the rate will remain unchanged at 25% for companies with profits over £250,000, while a 19% rate applies to profits of £50,000 or less. There’s a gradual increase for profits in between, ensuring that you won’t face sudden spikes in tax liabilities.

Changes to Company Size Thresholds.

New regulations from 6 April 2025 will increase company size thresholds, allowing more companies to transition to micro-entity status. This means fewer stringent reporting requirements and no statutory audits for many small businesses.

Simplifying your accounting process can save time and reduce stress!

Business Asset Disposal Relief (BADR).

Heads up, business owners! If you’re thinking of selling your business, note that the BADR tax rate will increase from 10% to 14% for disposals made on or after 6 April 2025. This relief is designed to support you when you decide to pass on your legacy. Please note that certain conditions must be met to qualify for this relief.

R&D Scheme updates.

The merged Research and Development (R&D) scheme will make it easier for businesses working on research and development projects aimed at improving science or technology to claim tax relief. For companies with accounting periods starting on or after 1 April 2024, the threshold for investment in a company’s total expenditure on qualifying R&D costs has been lowered from 40% to 30%, meaning that more businesses can be eligible for relief.

Make sure to stay updated on the specifics and conditions you need to meet to maximise your benefits!

Living Wage & National Minimum Wage increases.

From April 2025, the National Living Wage and National Minimum Wage will see increases. Ensure your payroll is prepared for these changes! You can check the list of currently applicable rates here.

Double Cab Pick-Up Vehicles.

If your business uses double cab pick-ups, get ready for a change! From April 2025, these vehicles will be treated as cars for tax purposes.

Starting from 6 April 2025, the way double cab pick-ups are taxed in the UK will change. Until that date, the classification of these vehicles for tax purposes was aligned with VAT rules, which categorised them based on their weight. Vehicles under one tonne were considered cars, while those over one tonne were considered vans. The classification of double cab pick-ups will now depend on the overall design of the vehicle when it is made available, rather than relying on weight alone. As a result, most double cab pick-ups will likely be classified as cars for tax purposes, since they can carry both passengers and goods equally well, which would have tax implications on capital allowances and benefits in kind. For vehicles purchased or leased before 6 April 2025, the old tax rules will still apply until the vehicle is sold, the lease ends, or until 5 April 2029, whichever comes first.

Furnished Holiday Lettings (FHL) Tax Regime.

Lastly, the Furnished Holiday Lettings tax exemptions was abolished from April 2025. This means that FHL properties will be subject to the same tax rules as other properties concerning finance costs, capital allowances, Capital Gains Tax, and pension relief. This change will impact individuals, companies, and trusts that own or sell furnished holiday lets.

As we navigate these important changes in the tax landscape, remember that knowledge and preparation are your best allies. By understanding the upcoming shifts and taking proactive steps now, you can ensure that your business remains resilient and well-positioned for success.

If you have questions or need guidance on how to adapt to these new regulations, don’t hesitate to reach out to us. We can provide tailored advice to ensure you’re making the most of your opportunities and lessening any potential burdens. Together, let’s approach this new tax season with confidence and clarity. Your business is your passion—let’s ensure it flourishes for years to come.

Stay informed and proactive—your business deserves it!