April 2025 Tax Changes | Is the UK Still Open for Business?

We have highlighted some of the key changes from the budget and how they are expected to impact local businesses.

Employer National Insurance Contributions and Minimum Wage Increases

Employer National Insurance Contributions (NICs) are set to increase from 13.8% to 15% on 6th April. At the same time, the threshold at which employers start paying NICs will fall from £9,100 to £5,000. The combination of which, means employers will pay greater contributions on a larger proportion of an employee’s salary.

To offset some of this impact, there has been an increase in the employment allowance however, which is a tax-free amount that qualifying employers can deduct from their NIC bill, rising from £5,000 to £10,500. Although this will be a welcome change for smaller businesses, the net result will still be a larger National Insurance bill each month for many employers.

Furthermore, this coincides with a 6.7% increase in the National Minimum Wage from 1st April 2025 and ultimately puts further strain on companies with a growing workforce.

We spoke previously with Tiarnan O’Neill, Group FD at Galgorm Collection, who shared his thoughts on the National Insurance changes and highlighted what effect it might have on the hospitality sector:

“The changes have been massive for all hospitality businesses, especially restaurants and sole traders where their margins are very tight, I can see it having a huge impact in terms of how those businesses move forward and ultimately whether they survive or not”.

Inheritance Tax

While there are no specific changes to the Inheritance tax legislation coming into force in April 2025, the government did announce in the Autumn Budget that they are committed to keeping the IHT thresholds at their current level until 2030. This entitles individuals to a nil rate band of £325,000 and a residence nil rate band of £175,000.

The heavily scrutinised changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) do not come into effect until 6th April 2026. This should provide sufficient time for individuals to undertake any required succession planning.

Business Rates Changes

Business rates are set to rise sharply for retail, hospitality and leisure businesses from 1st April. Businesses which previously availed of a 75% discount on business rates will see that discount cut to 40%. Many businesses in this sector are already struggling financially, the reduction or removal of rates reliefs could potentially result in closures.

Capital Gains Tax and Investment Reliefs

From 6th April 2025, capital gains that qualify for Business Asset Disposal Relief or Investors’ Relief will be taxable at 14%, up from the current 10%. This will increase further to 18% for disposals made on or after 6th April 2026.

Additionally, from 30 October 2024, the main rates of Capital Gains Tax (CGT) for assets other than residential property and carried interest have risen from 10% and 20% to 18% and 24%, respectively. The CGT rate for trustees and personal representatives has also increased from 20% to 24% for disposals made on or after this date.

The Capital Gains Tax rates for residential property disposals remain unchanged at 18% and 24%.

Non-Dom Tax Status Abolition

The heavily scrutinised non-domiciled tax status is to be abolished from 6th April 2025.

Individuals who were previously able to shelter overseas income and gains from UK taxation will be fully subject to UK tax on worldwide income and gains and subject to UK inheritance tax at 40%.

Furnished Holiday Lets and Private Rental Sector

The furnished holiday lettings tax regime will also be abolished, meaning holiday lets will no longer benefit from advantageous tax treatment compared to longer-term rental properties.

Regions and businesses who rely heavily on the tourism industry could face challenges if a high number of property owners choose to sell, potentially reducing the availability of short-term accommodation.

Vehicle Taxation Changes

Double cab pick-up trucks will be reclassified as cars for tax purposes, removing the favourable treatment they previously enjoyed. Businesses will need to be aware of the increase in benefit-in-kind tax rates for employees and the reduction in capital allowances for businesses operating these vehicles.

Stamp Duty and Housing Market Changes

From 6th April 2025, the Stamp Duty Land Tax (SDLT) thresholds are becoming more penal:

• The first-time buyer exemption will reduce from £425,000 to £300,000.
• The threshold for home movers will reduce from £250,000 to £125,000.

This, in addition to rising house prices will greatly increase upfront costs for buyers across the housing market.

Vehicle Excise Duty (VED)

The VED rates will double for all new petrol and diesel vehicles. Annual charges will rise up to as much as £5,490 in some cases.

Summary

Taken together, these changes mark a significant shift in the UK’s tax landscape. Employers, property owners, investors and high-net-worth individuals will all face increased tax burdens across multiple fronts.

While these changes are being introduced under the banner of raising revenue and increasing fairness, they will undoubtedly require businesses and individuals to carefully review their tax planning strategies to manage their exposure from April 2025 onwards.

If you have any questions or concerns about the changes highlighted, do not hesitate to get in touch!