As the 2025/26 tax year approaches, UK businesses must prepare for several significant tax changes that will impact financial planning and operations. Here's a comprehensive guide to the key alterations effective from 6 April 2025:
1. Increase in Employer National Insurance Contributions (NICs)
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Rate Increase: The employer NIC rate will rise from 13.8% to 15%.
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Threshold Adjustment: The threshold at which employers begin paying NICs will decrease from £9,100 to £5,000.
2. Reform of Non-Domiciled Taxation
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Abolition of the Remittance Basis: All UK residents will be taxed on their worldwide income and gains, ending the remittance basis of taxation.
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Introduction of a 4-Year Foreign Income and Gains (FIG) Regime: New UK residents who have not been tax resident in the UK for any of the 10 consecutive years prior to their arrival will receive 100% relief on foreign income and gains for their first four years of UK tax residence.
3. Changes to Capital Gains Tax (CGT) Rates
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Increase in CGT Rates: The rate on gains attracting Business Asset Disposal Relief (BADR) or Investors’ Relief will increase from 10% to 14%.
4. Stamp Duty Land Tax (SDLT) Threshold Reversion
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Threshold Reduction: The standard SDLT threshold will decrease from £250,000 to £125,000.
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First-Time Buyers: The threshold for first-time buyers will reduce from £425,000 to £300,000.
5. Vehicle Excise Duty (VED) Changes for Electric Vehicles
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New Zero-Emission Vehicles Registered on or after 1 April 2025: These vehicles will incur a first-year VED rate of £10, followed by the standard annual rate of £195.
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Existing Zero-Emission Vehicles Registered between 1 April 2017 and 31 March 2025: These vehicles will be subject to the standard annual rate of £195 from 1 April 2025.
6. Mandatory Real-Time Benefits Reporting
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Implementation Date: From April 2026, employers are required to process taxable benefits through payroll in real time, replacing the submission of P11D forms at the end of the tax year.
7. Inheritance Tax (IHT) Freeze and Pension Rule Changes
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IHT Thresholds: The current IHT thresholds were due to be frozen until 2028, but this has been extended until 2030.
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Pension Funds: Unspent pension funds will count as part of your estate for IHT purposes from April 2027.
8. Increases in Tobacco and Alcohol Duty
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Tobacco Duty: Increased by the Retail Price Index (RPI) measure of inflation plus 2% from 30 October 2024.
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Alcohol Duty: Set to rise in line with September 2024's RPI rate of inflation from 1 February 2025.
At Breaking the Mould Accounting Limited, we specialise in helping UK businesses optimise their tax strategies and remain compliant.
Get in touch with us today to discuss how we can support your financial success in the new tax year.
