Stephen Relf, ICAEW Technical Manager, Tax, said: 

“The start of the new financial year in April will see some significant tax changes for businesses, some of which were announced at the Autumn Budget 2024, including the changes to national insurance contributions rates, thresholds, and allowances for employers, all of which continue to attract headlines. 

“Others first saw life under the previous government and have since been tweaked, such as the abolition of the special tax rules for furnished holiday lets. Either way, they all represent important changes from this April, so businesses need to be prepared.”  

1.Increase to NIC 

As announced at the Autumn Budget 2024, there will be an increase in liabilities to secondary NIC for many employers for 2025/26. As a result of this and other changes (see below), government estimates suggest 940,000 employers will have an increased secondary NIC liability.  

For paydays on and after 6 April 2025:

• the rate of secondary NIC paid by employers on an employee’s earnings above the secondary threshold (the amount upon which employers pay contributions on employees’ earnings) will increase from 13.8% to 15%; and 
• the secondary threshold will reduce from £9,100 to £5,000 per annum. 

2.NIC employment allowance 

To compensate smaller employers for the changes to secondary NIC (above), the maximum amount of the NIC employment allowance, which can be offset by the employer’s secondary NIC bill, is increased from £5,000 to £10,500 from 6 April 2025. In addition, a key restriction is removed as the employment allowance is no longer restricted to smaller employers with a prior tax year secondary NIC liability of £100,000 or less. 

A number of important restrictions remain, however. These include, briefly, that a company where only one person is paid above the secondary threshold, and that person is a director, cannot claim the employment allowance. This is because the point of the employment allowance is to encourage businesses to take on staff. This restriction is complicated and can be difficult to apply – see HMRC’s guidance.   

3.Double cab pick ups 

Traditionally, HMRC has treated double cab pick-ups (DCPUs) with a payload of one tonne or more as goods vehicles (vans).  HMRC explains that a DCPU normally has:   

• two rows of seats in a front passenger cab with space for the driver and at least four passengers;   
• four doors that are capable of being opened independently; and 
• an uncovered pickup area behind the passenger cab.     

In a recent update to its guidance, HMRC says that references to DCPUs include “variants such as extended, extra, king and super cab pickups”. 
 
However, from 6 April 2025, HMRC will consider a vehicle’s primary suitability at the time it was made, with reference to the vehicle as a whole, for the purposes of:  
 

• capital allowances
• the benefit in kind rules (BIK); and
• some deductions from business profits.

   

This is likely to mean that most DCPUs will be treated as cars for direct tax purposes. Generally, less tax is paid where a vehicle is treated as a van rather than a car.  

Transitional rules will apply to preserve the previous treatment in some circumstances.  

No changes have been made to the VAT treatment. 

Our recent article explains more and includes an example which shows the potential impact of the changes. 

It is also worth noting that all BIK percentages for cars will increase by 1 percentage point for 2025/26 and that significant increases to the BIK percentages for hybrid cars were announced at Autumn Budget 2024 to take effect from April 2028.  

4.Furnished holiday lets (FHLs) 

Currently, a property business that qualifies as a FHL is treated as a trade and so benefits from several tax advantages. These include the following for individuals: 

• interest can be deducted in calculating the taxable income from the FHL;
• capital allowances can be claimed for some capital expenditure; and
• capital gains tax relief, such as business asset disposal relief, may be available on the disposal of the property.  

The FHL tax rules are abolished with effect from 1 April 2025 for companies and 6 April 2025 for individuals. From that date, the UK or overseas property business rules will apply as appropriate and the advantages of FHL treatment are lost. Transitional rules apply in some circumstances, for example, to allow capital allowances to be claimed in respect of expenditure in a capital allowances pool on 5 April 2025.  

The potential issues are explained in the Tax Track podcast from ICAEW: Checkout time for furnished holiday lets. There is also a worked example showing the possible impact of the changes in this article.   

5.Interest rates rise on unpaid tax liabilities

With effect from 6 April 2025, the interest rate charged by HMRC on unpaid tax liabilities will increase by 1.5 percentage points. Currently, HMRC’s interest rate for most taxes is 7%. Assuming that no changes are made to the Bank of England base rate between now and 5 April 2025, the rate will increase to 8.5% from 6 April 2025.

ENDS

Notes to editors: