Hey there, business owners! Tax changes might not be the most thrilling topic, but staying ahead of updates can save you time, stress, and—most importantly—money. Grab a coffee (or tea!) and let’s break down the key tax changes for 2025 in a simple, no-jargon way.
And don’t forget—you can download our 2025/26 tax tables freebie to have all the key figures at your fingertips!
Income Tax
No big changes, but personal income tax thresholds will remain frozen until April 2028, meaning tax bands won’t adjust for inflation. For business owners giving themselves a pay rise, this could mean moving into a higher tax bracket sooner than expected.
To manage this, consider tax-efficient investments like ISAs to keep more of your money working for you. If you run your own business, reviewing your salary and dividends mix could help optimise tax savings.
National Insurance
In April 2025, Employer NICs will increase from 13.8% to 15%, and the employee NIC threshold will drop from £9,100 to £5,000, meaning workers start paying NICs sooner.
However, there is some good news—the Employment Allowance will increase from £5,000 to £10,500, which can help small businesses offset costs.
If you’re an employer, it’s essential to budget for these increased staff costs. Take advantage of the Employment Allowance and consider adjusting salaries or employee benefits to help manage expenses effectively.
Business Rates
Currently, businesses benefit from a 75% discount on rates, but this will decrease to 40% in April 2025. Looking further ahead, 2026 may bring permanent lower rates for retail, hospitality, and leisure sectors.
To prepare:
Keep an eye on upcoming government relief measures.
Budget for higher rates in 2025.
Negotiate lease terms with landlords to mitigate the impact of rising costs.
Minimum Wage
The National Living Wage (21+) will increase by 6.7% to £12.21/hr, while 18-20-year-olds will see an even bigger 16% jump to £10/hr.
For employers, this means payroll costs will rise, so it’s crucial to update your budgets early. On the plus side, higher wages often lead to happier, more motivated employees. Implementing productivity measures can help offset increased labour costs.
Capital Gains Tax
The capital gains basic rate will increase from 10% to 18%, while the higher rate jumps from 20% to 24%. If you were planning to sell assets, you might want to do so before April 2025 to benefit from current rates.
For those using Business Asset Disposal Relief, your rate will now be 14%. Exploring tax-efficient reinvestment options and consulting a professional can help you strategise asset sales.
Corporation Tax
Thankfully, no changes are coming to Corporation Tax. The current rates remain:
19% for profits up to £50,000.
Gradual increase to 25% for profits up to £250,000.
This stability allows businesses to confidently plan for growth without worrying about sudden tax hikes. If you’re looking to invest in innovation, R&D tax relief remains a valuable opportunity.
Property Lettings
From October 2024, Stamp Duty on buy-to-let properties will rise to 5%. Additionally, Furnished Holiday Lettings (FHL) will lose their tax perks in April 2025 and be taxed as regular rentals.
If you’re a landlord, now is the time to:
Factor in these extra costs before expanding your portfolio.
Explore long-term letting strategies to maximise profitability.
Assess whether property investments align with your overall financial goals.
Digital Taxes & HMRC
Interest rates on late tax payments will increase, making timely filing even more important. The Making Tax Digital (MTD) threshold will rise to £20,000, meaning smaller businesses could find reporting easier. Meanwhile, HMRC is increasing investigations, so tax investigation insurance may be worth considering.
To stay ahead:
Keep accurate records and file on time.
Use accounting software to streamline tax compliance.
If your business is close to the £20k threshold, prepare for Making Tax Digital requirements.
Join the Federation of Small Businesses (FSB) to get tax investigation insurance included in your membership! Plus, enjoy 10% off your first year, when you use the code EW0225 to sign up!
Benefits in Kind
From 2026, employee benefits like health insurance can be reported via payroll software, simplifying the process. However, Company Car Tax will increase slightly in 2028 for zero-emission vehicles.
For businesses offering company cars, it’s a good idea to:
Plan ahead for this tax increase.
Explore alternative benefit structures to optimise tax efficiency.
How to Stay Tax-Savvy in 2025
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Plan ahead for wage and tax increases to avoid cash flow surprises.
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Use reliefs and allowances to reduce costs where possible.
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Stay compliant—with more HMRC scrutiny, accurate records are a must.
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Talk to a tax pro if any of these changes significantly impact your business.
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Monitor upcoming government announcements for further adjustments beyond 2025.
Taxes don’t have to be scary—especially when you know what’s coming! Keep this guide handy, and you’ll be well-prepared for the 2025 changes. Got questions? Book a call with us today!
Happy (and stress-free) tax planning!
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