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Several tax-related changes to take effect
Newsletter issue – April 2025
A number of tax changes are set to take effect in April, with National Insurance contributions for employers and a facet of Capital Gains Tax among them.
Employer NICs will rise from 13.8%, as it stands now, to 15% from 6 April 2025. And there are changes afoot for the Secondary Threshold - the point at which employers become liable to pay NICs on employees‘ earnings. This will go down to £5,000 a year from 6 April 2025 until 6 April 2028, dropping from the current rate of £9,100 a year.
The Employment Allowance will more than double, increasing from £5,000 to £10,500. This means that 865,000 employers will not pay any NI at all, according to Treasury figures. The Government is also scrapping the £100,000 threshold for eligibility, expanding it to all eligible employers with employer NICs bills from 6 April.
Some changes to Capital Gains Tax took effect immediately after the Budget in October. However, CGT that applies to The Business Asset Disposal Relief (BADR) and Investors‘ Relief (IR) rate rises from 10% to 14% from 6 April 2025. Residential property rates for CGT are not changing.
Although Inheritance Tax changes dominated the headlines in October and since, due to the impact on farmers, these will not kick in until 2026. Many of the main aspects of IHT will remain the same. The first £325,000 of any estate will still be tax-free – or £500,000 if the estate includes a residence passed to direct descendants. The nil-rate band (currently £325,000) and the residence nil-rate band ( £175,000) also remain the same. Furthermore, the residence nil-rate band taper will continue to start at £2 million.
Another change set to occur is an increase in the interest rate charged by HMRC on unpaid tax liabilities. This will rise by 1.5 percentage points as of 6 April. So, if the Bank of England base rate remains the same as it is now, the standard interest rate for most unpaid taxes will rise from 7% to 8.5%. Income Tax, VAT, and NI for employees will all remain the same, come April. Corporation Tax will continue to stand at 25%.
The one note of caution we‘d issue to all of the above is that there is a small chance some of these areas could be tinkered with at the Spring Statement on 26 March. However, based on everything we know at this point and what the Chancellor is saying, it appears very unlikely that any of these will change. There could be some tinkering with income tax thresholds for future years and changes to ISA rules, if media speculation proves to come true, but tax changes are expected to be limited when Rachel Reeves delivers her Spring update.
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