Businesses are being warned about the five significant tax changes from April 6, 2025, as highlighted by the chartered accountancy body ICAEW.
Many of these changes were unveiled by Chancellor Rachel Reeves in her Autumn Budget 2024, with further policies to be announced during the Spring Statement on March 26.
Here is a full of the changes being implemented by HM Revenue and Customs (HMRC) that will impact businesses next month:
- Increase to the rate paid towards National Insurance contributions (NICs)
- Changes to the National Insurance employment allowance
- Double cab pick ups
- Furnished holiday lets (FHLs)
- Interest rates rise on unpaid tax liabilities.
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Britons are being reminded about looming tax changes
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The rate of secondary NIC paid by employers on employee earnings above the secondary threshold will rise from 13.8 per cent to 15 per cent.
Additionally, the secondary threshold will be reduced from £9,100 to £5,000 per annum. These changes will apply to all paydays on and after April 6, 2025.
Government estimates suggest that approximately 940,000 employers will experience an increased secondary NIC liability as a result of these and other related changes.
To compensate smaller employers for these NIC changes, the maximum NIC employment allowance will increase from £5,000 to £10,500 from April 6, 2025.
A key restriction is also being removed, as the employment allowance will no longer be limited to smaller employers with a prior tax year secondary NIC liability of £100,000 or less.
However, several important restrictions remain in place. For example, a company where only one person is paid above the secondary threshold, and that person is a director, cannot claim the employment allowance.
This restriction exists because the employment allowance is designed to encourage businesses to take on staff.
HMRC will change how double cab pick-ups (DCPUs) are taxed from April 6, 2025. Traditionally, DCPUs with a payload of one tonne or more were treated as goods vehicles or vans for tax purposes.
From April, HMRC will consider a vehicle’s “primary suitability at the time it was made” for capital allowances, benefit in kind rules, and some business profit deductions.
This means most DCPUs will now be treated as cars for direct tax purposes. Generally, vehicles classified as vans incur less tax than those classified as cars. Transitional rules will apply in some circumstances to preserve previous treatment.
No changes have been made to the VAT treatment. Currently, property businesses qualifying as Furnished Holiday Lets (FHLs) are treated as trades, offering several tax advantages.
These include the ability to deduct interest when calculating taxable income, claim capital allowances for certain expenditure, and potentially access capital gains tax relief on property disposal.
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Business owners are worried about the growing tax burden
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From April 6, 2025, these special tax rules will be abolished for individuals, while companies face the change from April 1, 2025. After these dates, standard UK or overseas property business rules will apply, resulting in the loss of FHL tax advantages.
Transitional rules will apply in some circumstances, such as allowing capital allowances claims for expenditure in a capital allowances pool on April 5, 2025.
Stephen Relf, Institute of Chartered Accountants in England and Wales’ (ICAEW) technical manager for Tax, shared: “The start of the new financial year in April will see some significant tax changes for businesses, some of which were announced at the Autumn Budget 2024, including the changes to national insurance contributions rates, thresholds, and allowances for employers, all of which continue to attract headlines.
“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. Either way, they all represent important changes from this April, so businesses need to be prepared.”