The economic landscape for UK businesses is constantly evolving, and staying informed about fiscal policy changes is crucial for strategic planning and long-term stability. While the Spring Statement 2025 did not bring about a raft of new major announcements, it’s essential to understand its implications alongside significant tax and regulatory changes that came into effect in April 2025, many of which were outlined in the Autumn Budget 2024. By understanding the changes, businesses can adapt their financial strategies effectively and position themselves for future growth.
Changes effective April 2025: Implications from the Autumn Budget 2024
Below are the key tax and employment-related changes, previously announced in the Autumn Budget 2024, that businesses are now navigating as of April 2025.
1. Employer National Insurance changes
Starting 6 April 2025, businesses will face higher payroll costs due to changes in Employer National Insurance Contributions (NICs):
- Rate increase: Employer NICs rise from 13.8% to 15%
- Lower threshold: The “secondary threshold” (where NICs kick in) drops from £9,500 to £5,000 per employee
What this means for your business:
- Higher payroll taxes on every employee earning above £5,000
- More of your wage bill will be subject to NICs
- Increased costs for hiring and retaining staff
2. Corporation tax & investment boost (Full expensing)
Knowing the tax rate on company profits and available reliefs is crucial for financial planning and investment.
- Small Profits Rate (19%): If your company’s profits are under £50,000, you’ll pay 19% Corporation Tax. This lower rate helps small businesses keep more of their earnings.
- Main Rate (25%): For businesses with profits over £250,000, the full 25% rate applies. This affects larger companies with higher taxable income.
- Marginal Relief (Gradual Increase from 19% to 25%): If your profits fall between £50,000 and £250,000, you may qualify for Marginal Relief. Instead of a sudden jump to 25%, your tax rate increases gradually between 19% and 25%.
- Full expensing power: This key relief lets eligible companies deduct 100% of the cost of new qualifying equipment from profits in the year of purchase. A 50% first-year allowance typically applies to longer-life assets, too.
3. VAT registration threshold increased
The turnover level at which businesses must register for VAT often gets adjusted.
- New threshold: The mandatory VAT registration threshold has remained the same, i.e £90,000.
- Impact: Some small businesses trading below the new threshold can avoid entering the VAT system for longer, reducing administration. If your sales are near the new limit, track them carefully to ensure you register on time if needed.
- Voluntary registration: Remember, you can still register voluntarily below the threshold if it benefits your business (e.g., if you mostly serve VAT-registered customers).
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4. Capital gains tax and BADR allowances
- For assets excluding residential property and carried interest, the main Capital Gains Tax (CGT) rates will increase from 10% and 20% to 18% and 24% for disposals made on or after October 30, 2024.
- The CGT rates for residential property disposals (18% and 24%) will remain the same.
- Currently, Business Asset Disposal Relief (BADR) allows the first £1 million of gains to be taxed at a 10% rate. However, for disposals on or after April 6, 2025, this rate rises to 14%, and it will further increase to 18% from April 6, 2026.
5. Making Tax Digital (MTD) for Income Tax updates
The Spring Statement 2025 has confirmed the rollout timeline for Making Tax Digital (MTD) for Income Tax, along with new exemptions and penalty changes. Here’s what you need to know:
MTD for Income Tax: Phased Implementation
- April 2026: Applies to sole traders & landlords with a gross income over £50,000.
- April 2027: Expands to those earning over £30,000.
- April 2028: Includes all sole traders & landlords with a gross income above £20,000.
New exemptions added
Some taxpayers will not need to comply with MTD for Income Tax, including:
- Non-UK resident entertainers & sportspeople (if no other UK income falls under MTD).
- Taxpayers with a Power of Attorney.
Increased penalties for late tax payments
Starting in April 2025, the penalties for late VAT payments and Self Assessment income tax payments (for those within MTD) will increase. The new penalty structure will be:
- 3% of the outstanding tax if payment is 15 days late.
- An additional 3% of the outstanding tax if payment is 30 days late.
- A further penalty of 10% per year will be applied to the outstanding tax if it remains unpaid after 31 days.
6. Tax reliefs to support growing businesses
The government plans discussions in Spring 2025 on improving tax reliefs for entrepreneurs, including:
- Enterprise Management Incentives (EMI) – Helps startups attract talent.
- Enterprise Investment Scheme (EIS) – Encourages investment in small businesses.
- Venture Capital Trusts (VCTs) – Supports high-growth companies.
These measures aim to create a better environment for scaling businesses.
7. Other tax changes
Rise of National Minimum Wage – Rising to £12.21/hour from April 2025.
Company vehicle tax changes
- HMRC is tightening definitions of “cars” vs. “vans”.
- Some vehicles may be reclassified, potentially increasing Benefit-in-Kind taxes.
Higher Statutory Pay Rates
- Statutory Sick Pay increases to £118.75/week.
- Family leave pay (maternity/paternity/adoption) rises to £187.18/week.
End of Furnished Holiday Lettings Tax regime
- The FHL tax regime ends in April 2025.
- All holiday rentals will now follow standard rental property tax rules
Proactive planning: 5 steps to prepare
The 2025/26 tax year brings a mix of challenges and opportunities. By understanding these changes early, businesses and landlords can follow the steps below.
- Conduct a full tax health check – Identify all potential impacts on your business.
- Review your business structure – Consider whether incorporation or restructuring could be beneficial
- Update your financial forecasts – Model the impact of all changes.
- Invest in digital systems – Ensure MTD compliance and improve efficiency
- Consult professionals early – Get tailored advice before making major decisions.
Remember that early action always provides the most incredible flexibility and best outcomes.
How can your accountant help?
Understanding how all these changes affect your specific business can be tricky. Your accountant is here to help cut through the complexity. We can explain what new tax rates and reliefs mean for your bottom line, ensure you stay compliant (e.g., with MTD), spot tax-saving opportunities (like R&D relief or Full Expensing), and advise on strategic financial decisions in light of the latest updates. We help you navigate the changes effectively.
