Five important tax changes from April 2025 to keep on your radar

The tax headlines have been dominated in recent months by the impact of the Labour government’s changes on the rural and farming business community. These include the restrictions to agricultural and business property relief from April 2026 and the removal of the 2025 Sustainable Farming Incentive.

However, the government introduced several less well publicised tax changes from 6 April 2025. We summarise some of the key changes and provide insight as to what these mean for you and your business.

Three changes to employers’ NIC came into effect from 6 April 2025: 

• The main rate has risen from 13.8% to 15%
• The salary threshold at which employers’ NIC becomes payable has been reduced from £9,100 per annum to £5,000 per annum
• The employment allowance, which providers employers with relief for NIC, has increased from £5,000 to £10,500 per annum. Also, the previous eligibility restriction, which limited the allowance to employers with an annual NIC bill of £100,000 or less, has been removed

In many cases, this will result in increased NIC liabilities for employers. For example, an employee earning £30,000 per annum will now attract an additional employers’ NIC cost of £866 per year (ignoring the employment allowance).

However, smaller businesses, who employ only a handful of workers on the national minimum wage, may see their businesses better off as a result of these changes, due to the increase in the employment allowance. For example, a business with four workers each on a salary of £25,000 per annum will see their employers’ NIC bill reduce by 60%. 

Planning options could include: salary sacrifice options for employees, increasing employee headcount but reducing the overall salary bill and subcontracting out more work. This may also be a good opportunity to review the wider efficiencies of your business. 

Fuel duty freeze

Fuel duty was frozen for a further year, which is a small positive for rural businesses that are often heavily reliant on vehicles. However, it is not beyond the realms of possibility that we could see a removal of the temporary 5p per litre cut introduced by the Conservative government in March 2022 in the next Budget, expected in the Autumn. Therefore, businesses should consider cashflow planning to safeguard against cost increases later this year.

Double cab pickups

Double cab pickups no longer benefit from the favourable tax treatment that classified them as commercial vehicles. Instead, they will now be taxed as company cars, which means higher benefit-in-kind (BIK) rates, impact on capital allowances, increased national insurance for employers and VAT implications. This change could significantly increase the tax liabilities for employees and directors who use double cab pickups for personal use.  

Vehicles affected include the Nissan Navara, Toyota Hilux, Mitsubishi L200, Isuzu D-Max amongst others, and includes ‘super cabs’ or ‘1.5 cab’ pick-ups – those with only area for back seating, and often where the doors are hinged at the back. 

Possible planning might include using alternative vehicles where practical – single cab pick-ups, panel vans, and ATVs (quadbikes/gators) are all still included in the more favourable old regime. Alternatively, employers could enforce no private use by the employees, to mitigate the increase in employers’ NIC. 

The furnished holiday lettings (FHL) regime has been abolished as of 6 April 2025. This change means that income from properties previously qualifying as FHLs will now be treated as standard property income. As a result, the associated tax advantages, such as capital allowances and specific capital gains tax reliefs, will no longer apply. Property owners may need to review their tax planning strategies to account for this change.

However, a potential benefit from these changes is that accumulated FHL losses which previously could only be set against future FHL profits can now be used against standard rental profits. This is helpful for businesses who previously held a mix of FHLs and standard rental properties.

From 6 April 2025 the rate of BADR (formerly entrepreneurs’ relief) increased from 10% to 14% for gains subject to a total lifetime allowance of £1m. From 6 April 2026, the rate will increase again to 18%.

Business owners looking to sell all, or a part of, their business may therefore wish consider advancing the sale before 6 April 2026 to lock in the lower tax rate.

The increase in rates also applies to investors’ relief, for taxpayers disposing of specific investments in UK trading businesses. 

In addition to the above, there have been adjustments to the dividend allowance and the capital gains tax annual exempt amount and stamp duty land tax (SDLT).

From 6 April 2025 the dividend allowance has been reduced from £1,000 to £500, and the capital gains tax annual exempt amount has been reduced from £6,000 to £3,000. These changes may impact individuals with dividend income or capital gains.

From 1 April 2025, the SDLT rates and thresholds for residential property reverted to the pre-23 September 2022 structure. The nil rate threshold decreased from £250,000 to £125,000, increasing the SDLT on a property worth £500,000 by £2,500.

The maximum purchase price for first-time buyer relief reverted to its earlier limit, from £425,000 to £300,000.

If you would like to discuss how you or your business are affected by any of these changes, and any actions you could consider now, do get in touch with your usual contact or one of the contacts listed.

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