Twelve April 2025 tax changes you need to know about!

1. Employer National Insurance increase

Beginning on Sunday, April 6, there will be significant changes to employers’ national insurance contributions (NICs). The contribution rate will increase from 13.8% to a new rate of 15%, placing a greater financial responsibility on employers. Furthermore, the income threshold for these contributions will drop from £9,100 to £5,000, meaning employers will begin paying NICs on a larger portion of their employees’ earnings.

On a more positive note, the Employment Allowance, a vital measure designed to assist eligible employers in reducing their NICs liabilities, will see a notable increase from £5,000 to £10,500. This increase is especially vital for smaller employers, offering them much-needed relief and support amidst rising costs.

2. Council tax rises

By an average of 5% in England, by 6-15.6% in Scotland and by 4.5%-9.5% in Wales. These are in effect from 1st April.

3. Increases in Scottish income tax thresholds

The basic and intermediate rate thresholds rise by 3.5% for Scottish income tax payers for the new tax year on 6th April, which will mean that Scottish taxpayers will pay up to £14.51 less income tax in cash terms (i.e. not allowing for inflation). Other income tax thresholds in Scotland remain frozen, as do all income tax thresholds in England, Wales and Northern Ireland.

4. Higher stamp duty land tax

Starting April 1st, the temporary reduction in the Stamp Duty Land Tax (SDLT) nil rate thresholds in England, implemented in 2022, has officially concluded. As a result, the thresholds have reverted to their former amounts: £300,000 for first-time buyers, who are encouraged to enter the property market with additional support, while the maximum purchase price eligible for first-time buyer relief has been adjusted to £500,000. For all other purchasers, the threshold stands at £125,000. This shift marks a significant change in the landscape of property buying in England, impacting both new homeowners and seasoned investors alike.

5. Higher interest on late payments

The interest rate HMRC charges for late payment of tax increases by a further 1.5% on Sunday (6 April) to 8.5%, changing from the Bank of England base rate plus 2.5% to the base rate plus 4% for most taxes. The interest rate HMRC pay in relation to tax repayments remains at 3.5%, set at base rate minus 1%, with a lower limit of 0.5%. This means that the differential between the rate of interest charged by HMRC and the rate paid by HMRC is increasing from 3.5% to 5%.

6. New reporting requirements for self-employed

From the start of the 2025-26 tax year (6 April), the previously voluntary requirement for taxpayers who start or cease to trade to report the start and end dates on their self-assessment tax return will become a mandatory requirement.

7. New reporting requirement for company directors

Beginning on 6 April of the 2025-26 tax year, a significant change will take effect regarding self-assessment tax returns. Taxpayers who initiate or conclude their trading activities will now be required to provide the specific start and end dates of their business endeavors. This shift transforms what was once a voluntary process into a mandatory obligation, ensuring that the tax authority has accurate information about the timeline of individual trading activities.

8. Vehicle excise duty extended to EVs

As of the beginning of April, electric, zero-emission, and low-emission vehicles including cars, vans, and motorcycles, are now subject to newly implemented vehicle tax rates. These changes reflect a growing commitment to promoting environmentally friendly transportation options. Additionally, most other drivers will experience an increase in their tax rates, making this a significant moment for all vehicle owners as they navigate the evolving landscape of vehicle taxation.

9. Changes to capital gains tax reliefs

On Budget day, 30 October 2024, the main rates of Capital Gains Tax (CGT) were increased. The rates rose from 10% and 20% to 18% and 24%, respectively, for disposals made on or after that date. This change equalized the rates for these assets with the previously higher rates for residential property. Additionally, starting on 6 April, the rates for taxpayers eligible for Business Asset Disposal Relief and Investors’ Relief increased from 10% to 14%, with a further increase to 18% planned for the following year. Furthermore, the rate for ‘carried interest’ gains has risen from a range of 18-28% to a new single rate of 32%.

10. Landlords lose access to allowances

The separate tax regime for furnished holiday lettings (FHLs) began at the start of April for companies and on 6th April for other businesses. Under the current FHL regime, qualifying holiday lets are treated as a trade for certain tax purposes, which provides them with tax advantages compared to non-FHL property businesses. These advantages include access to capital allowances and capital gains tax relief.

11. New tax rules for non-doms

Also, from 6th April, long-term residents face UK tax on their worldwide income and gains even if the UK is not their permanent home (‘domicile’). Previously, under the ‘remittance basis’, non-doms were able to not pay UK tax on their foreign income and gains provided they did not bring it (remit it) into the UK. A Temporary Repatriation Facility will enable former remittance basis users to bring capital representing previous years’ foreign income and gains into the UK with a reduced tax charge. New arrivers to the UK will benefit from up to four years of tax exemption on their foreign income and gains. There is also a new residence-based system for inheritance tax.

12. Agricultural property and Business property relief extended

From 6th April, the scope of agricultural property relief (APR) and business property relief (BPR) from inheritance tax will be extended. Further reaching changes to APR and BPR, announced in October’s Budget, are expected to be introduced in a year.

How Garner & Hancock Can Help

Navigating the ever-changing legal and financial world can be tough, especially with so many changes rolling out this April. At Garner & Hancock, we’ve got your back with expert legal advice that fits your needs. Whether you’re an employer worried about National Insurance contributions, a homeowner trying to figure out stamp duty changes, or a landlord dealing with new regulations, our skilled solicitors are ready to help. Reach out to us for straightforward, professional advice and solutions to keep you ahead of the game.