ICAEW’s Tax Faculty picks out 10 important changes applying from 1 April 2025 for companies and 6 April 2025 for individuals and unincorporated businesses.
The start of the new financial year for companies and the new tax year for individuals will see some significant changes to taxation, affecting a wide range of taxpayers. Some of the changes were announced at the Autumn Budget 2024 – including the changes to national insurance contributions (NIC) rates, thresholds and allowances for employers, which continue to attract headlines – while 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 (FHLs).
April 2026 may be busier still, marking the start of making tax digital for income tax for many sole traders and landlords and mandatory payrolling of benefits in kind (BIK). More on that to come but in the meantime, a recent episode of ICAEW’s podcast The Tax Track explains what you can do now to get ahead of the game.
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Employers’ NIC
As is well known, changes announced at the Autumn Budget 2024 will increase liabilities to secondary NIC for many employers for 2025/26.
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 will increase from 13.8% to 15%; and
- the secondary threshold will reduce from £9,100 to £5,000 per annum.
Further information -
NIC employment allowance
To compensate smaller employers for the changes to secondary NIC covered above, the maximum amount of the NIC employment allowance is increased from £5,000 to £10,500 with effect from 6 April 2025. Further, a key restriction is removed: from 6 April 2025, the employment allowance is no longer restricted to employers with a prior tax year secondary NIC liability of £100,000 or less.
The employment allowance is offset against the employer’s secondary NIC liabilities. A number of important restrictions remain, including that single director limited companies (eg, some personal service companies) with no other employees paid above the secondary threshold cannot claim the employment allowance.
Further information -
Double cab pick-ups
Traditionally, HMRC has treated double cab pick-ups (DCPUs) with a payload of one tonne or more as goods vehicles.
From 1/6 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 BIK rules; and
- some deductions from business profits.
This is likely to mean that most DCPUs will be treated as cars for direct tax purposes. Transitional rules apply to preserve the previous treatment in some circumstances.
No changes have been made to the VAT treatment.
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.
Further information
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Non-UK domiciled individuals
From 6 April 2025, the long-standing tax rules for non-UK domiciled individuals (often referred to as ‘non-doms’) are abolished and replaced with a residence-based regime.
The new regime provides 100% relief on foreign income and gains for new arrivals to the UK in their first four years of tax residence, provided they have not been UK tax resident in any of the 10 consecutive years prior to their arrival.
Further information -
Scottish income tax
Changes have been made to the income bands for the starter, basic and intermediate rates of income tax applying to non-savings and non-dividend income of Scottish taxpayers for 2025/26.
2025/26 2024/25 Band
Rate
Band
Rate
Starter rate
£12,571*-£15,397
19%
£12,571*-£14,876
19%
Basic rate
£15,398-£27,491
20%
£14,877-£26,561
20%
Intermediate rate
£27,492-£43,662
21%
£26,562-£43,662
21%
Higher rate
£43,663-£75,000
42%
£43,663-£75,000
42%
Advanced rate**
£75,001-£125,140
45%
£75,001-£125,140
45%
Top rate**
Above £125,140
48%
Above £125,140
48%
*Assumes individuals are in receipt of the standard UK personal allowance.
**Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.For the avoidance of doubt, no changes have been made for 2025/26 to:
- the personal, dividend or savings allowances, or to rates of income tax, for UK taxpayers; or
- the income tax bands applying for taxpayers in England, Wales or Northern Ireland and for Scottish taxpayers with regard to their dividend and savings income.
Further information -
Tax return information requirements
From 6 April 2025, new mandatory tax return requirements apply to:
- taxpayers who start or cease to trade. Where a person starts or ceases to trade during a tax year, they must report the date of commencement/cessation in the tax return for that year. This requirement was voluntary but is now mandatory; and
- directors of close companies. The voluntary requirement to indicate if the person is a director of a close company is made mandatory. In addition, the person must provide the following information:
- the name and registered number of the close company;
- the value of dividends received from the close company for the year; and
- their percentage shareholding in the company during the year.
The new requirements apply for tax returns for 2025/26 and later tax years.
Further information -
Rates of CGT
The rate of capital gains tax (CGT) on gains attracting business asset disposal relief (BADR) or investors’ relief is increased from 10% to 14% with effect from 6 April 2025. The rate will increase to 18% from 6 April 2026.
Also from 6 April 2025, the lower and higher rates of CGT for carried interest gains (18% and 28%) are replaced with a flat rate of CGT of 32%. From 6 April 2026, carried interest will be brought within the income tax framework, with a 72.5% multiplier applied to the amount of interest subject to tax.
The changes are part of a package of CGT measures announced at the Autumn Budget 2024. This included increasing, with effect from 30 October 2024, the lower and higher rates of CGT applying to gains other than BADR, investors’ relief and residential property gains from 10% and 20% to 18% and 24%.
Further information
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Furnished holiday lets
Traditionally, a property business that qualified as a furnished holiday let (FHL) benefited from a number of tax advantages. These included the following for individuals:
- interest could be deducted in calculating the taxable income from the FHL;
- capital allowances could be claimed for some capital expenditure; and
- capital gains tax relief, such as BADR, 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 apply as appropriate. Transitional rules apply in some circumstances, for example, to allow capital allowances to be claimed in respect of expenditure in a capital allowances pool at 1/5 April 2025.
Further information -
Residential rates of SDLT
The temporary residential rates of stamp duty land tax (SDLT) introduced by the previous government in 2022 will be withdrawn on 31 March 2025.
For transactions with an effective date on or after 1 April 2025:
- the residential nil rate band will revert to £125,000 (from £250,000);
- the first-time buyers’ relief nil rate band will revert to £300,000 (from £425,000); and
- the maximum transaction value for first-time buyers’ relief will revert to £500,000 (from £625,000).
Further information -
ATED
The annual tax on enveloped dwellings (ATED) is a tax on non-natural persons (eg, companies) with interests in UK dwellings valued at more than £500,000. It is calculated and paid on an annual basis. The amount charged is determined by the band the property falls into and whether or not a relief applies.
The ATED charges increase automatically each year in line with inflation.
Taxable value of property
Charge for 2025/26
Charge for 2024/25
More than £500,000 up to £1m
£4,450
£4,400
More than £1m up to £2m
£9,150
£9,000
More than £2m up to £5m
£31,050
£30,550
More than £5m up to 10m
£72,700
£71,500
More than £10m up to £20m
£145,950
£143,550
More than £20m
£292,350
£287,500
For companies in scope at 1 April 2025, the return must be submitted and the tax paid for the year ending 31 March 2026 by 30 April 2025.
Further information
Further information
View tax tables on the MyICAEW App. You can also use the app to read articles and listen to podcasts.
- TAXguide 08/24: Payrolling of benefits-in-kind and expenses webinar Q&As
- TAXguide 07/24: Tax treatment of travel costs for directors of VC portfolio companies
- TAXguide 06/24: Taxation of cars, vans and fuel Q&As
- TAXguide 05/24: Payroll and reward update webinar Q&As
- TAXguide 04/24: The cash basis for trades: Q&As
