There are some significant changes for accountants in this forthcoming tax year:
Payroll and Employer NICs (National Insurance contributions) (Effective 6 April 2025)
- Employer NI Rate Increase: The rate rises from 13.8% to 15%.
- Lowered Secondary Threshold: Employers start paying NI on earnings above £5,000 per year (down from £9,100).
- Increased Employment Allowance: The allowance increases to £10,500 (up from £5,000), and the £100,000 eligibility cap is removed.
- National Living Wage (NLW): Rises to £12.21 per hour for those aged 21 and over.
- Mandatory Data Reporting: New requirements to report employee hours via real-time PAYE, and start/end dates for self-employment.
Business and Capital Gains Tax (CGT)
- Business Asset Disposal Relief (BADR): The tax rate on gains increases from 10% to 14% for disposals on/after 6 April 2025 (rising to 18% in 2026).
- Furnished Holiday Lettings (FHL): The FHL regime is abolished. FHL properties are now taxed as standard property businesses, losing special capital allowance and loss relief perks.
- Double Cab Pick-ups: From 1 April (Corp Tax) / 6 April 2025 (Income Tax), these are treated as cars for Benefit-in-Kind (BIK) and capital allowances.
- Company Size Thresholds: Increased thresholds (Companies Act 2024) mean many companies move from medium to small or small to micro, reducing audit and reporting burdens.
- R&D Tax Regime: The new merged R&D scheme applies to accounting periods beginning on or after 1 April 2024, affecting 2025 filings.
Personal Tax and Income
- Frozen Thresholds: The Personal Allowance remains at £12,570 and the higher rate threshold at £50,270 (until 2030/31), continuing “fiscal drag”.
- Dividend Allowance: Remains at £500.
- Non-Dom Tax Rules: The old regime is abolished and replaced with a new four-year residence-based regime (100% relief on foreign income for new arrivals).
- High Income Child Benefit Charge (HICBC): The threshold rises to £60,000 (taper up to £80,000).
- Winter Fuel Payment Tax Charge: A new income tax charge applies to those with incomes over £35,000 receiving the payment.
Making Tax Digital (MTD) and Compliance
- MTD for Income Tax: Becomes mandatory from 6 April 2026 for sole traders/landlords with income over £50,000.
- “Soft Landing” Period: For the 2026/27 tax year (first year), there are no late-submission penalties for quarterly updates.
- Tax Adviser Registration: From April 2026, all agents dealing with HMRC must register and meet new professional standards.
- Increased HMRC Penalties: Late payment interest and penalties for non-compliance are increasing.
Key deadlines to watch
- 5 October 2025: Register for Self-Assessment (first-time filers).
- 31 January 2026: File 2024/25 online return and pay 1st payment on account for 2025/26.
- 1 April 2025: New FHL rules and increased Employer NI take effect.
- 6 April 2025: New BADR rates and Minimum Wage changes.
Do these affect you? Learn more at financeSHOWCASE – first stop Twickenham, 17th March. Get your FREE tickets here
