As we step into a new financial year, several significant tax changes are set to impact businesses and individuals across the UK. From increased road tax for electric vehicles to changes in stamp duty and corporation tax, here’s everything you need to know about the key financial adjustments taking effect from 1 April.
Road Tax Increases
For the first time, electric vehicles (EVs) will be subject to road tax, marking a major shift in vehicle excise duty (VED) policies:
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New electric cars will be charged £10 for the first year, up from £0.
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EVs under £40,000 will pay £190 per year from the second year onwards.
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EVs priced over £40,000 will face an annual charge of £600, including a £410 ‘expensive car supplement’.
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Hybrid and petrol/diesel cars will see across-the-board increases in VED:
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Vehicles emitting 1-50 g/km CO2: First-year tax rises to £110 from £0.
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Vehicles emitting 51-75 g/km CO2: Tax increases from £30 (or £20 for hybrids) to £135.
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Petrol and diesel cars registered after 1 April 2017: Standard tax rises to £195 from £190.
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First-year tax for new petrol and diesel cars will increase significantly, with some models facing a doubling of their initial tax rate.
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Stamp Duty Changes
From 1 April, stamp duty land tax (SDLT) rates will revert to pre-discounted levels:
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The stamp duty threshold drops from £250,000 to £125,000.
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The first-time buyer threshold decreases from £425,000 to £300,000.
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The maximum property value benefiting from first-time buyer relief falls from £625,000 to £500,000.
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Property investors face a higher surcharge, making residential investment less tax-efficient.
Capital Gains Tax (CGT) Updates
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CGT rates remain at 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers.
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The additional SDLT premium for second home owners and landlords increases to 5% as of 31 October 2024.
Changes to Income from Furnished Holiday Lets (FHL)
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From 1 April for companies and 6 April for individuals, trusts, and partnerships, income from FHLs will be taxed like long-term lets.
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Benefits such as capital allowances and reliefs will no longer be available.
National Minimum Wage Increase
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The National Living Wage (for workers aged 21+) rises to £12.21 per hour (up from £11.44).
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The 18-20 rate increases to £10 per hour.
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Apprentices under 19 and first-year apprentices, as well as workers under 18, will receive £7.55 per hour.
Corporation Tax and Business Allowances
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The corporation tax rate remains at 25% for profits above £50,000, with a 19% rate for profits under £50,000.
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The full expensing allowance, which allows businesses to deduct capital expenditure, is now permanent.
Company Car Tax Hikes
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EVs will see company car tax rates increase to 3% in 2025-26, rising by 1% per year up to 9% by 2030.
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Petrol and diesel cars will face benefit-in-kind (BIK) tax rates from 25% to 37%, depending on emissions.
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Employees earning over £8,500 annually will be liable for this tax.
Air Passenger Duty (APD) Increases
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Domestic flights: £8 (reduced rate) to £16 (standard rate).
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Band A (flights up to 2,000 miles): £15 (economy) and £32 (premium).
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Band B (2,001-5,500 miles): £102 (economy) and £244 (premium), increasing to £106 and £253 respectively.
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Private jets with over 19 seats will face a 50% APD surcharge, with costs ranging from £142 to £1,141 depending on distance.
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The higher APD rates are expected to generate £520m for the Treasury this tax year.
Dividend Tax Rates and Allowances
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The dividend allowance remains at £500 per year.
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Tax rates on dividends are unchanged:
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8.75% for basic rate taxpayers
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33.75% for higher-rate taxpayers
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39.35% for additional rate taxpayers
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At Breaking the Mould Accounting Limited, we specialize in helping businesses and individuals navigate complex tax changes efficiently. Whether you need assistance with tax planning, compliance, or financial strategy, our expert accountants are here to support you.
📞 Contact us today to ensure you're making the most of your financial opportunities and minimizing your tax liabilities!
