Tax Changes You Need to Know About From 6 April 2025

The start of the 2025 tax year brings important updates that could impact your finances. Whether you're a business owner, employee, or property investor, these changes are crucial to understand.

Here’s a breakdown of the most significant tax updates that affect millions of people from 6 April 2025:

1. National Insurance Contributions (NICs)

• Employer NICs have increased to 15% from 13.8%.

• The threshold at which employers start paying NICs has dropped from £9,100 to £5,000.

• Employment Allowance is raised from £5,000 to £10,500, now available to all businesses, including those with a higher NIC liability.

Why it matters: This change will increase employer tax bills, especially for small businesses. The allowance increase offers some relief.

2. Electric Vehicle (EV) Taxation

• EVs are now subject to Vehicle Excise Duty (VED), which was previously only applied to petrol and diesel vehicles.

• New EV owners will face a £10 first-year tax, followed by an annual rate that can go up depending on vehicle value.

• A five-year surcharge for vehicles valued over £40,000 will be applied.

Why it matters: Taxing EVs for the first time marks a significant shift in policy, which means those transitioning to electric cars should now budget for an extra annual cost.

3. Capital Gains Tax (CGT) Rate Increase

• The CGT higher rate has risen to 24% from 20%.

• This impacts individuals and businesses selling assets such as shares, property, and other investments.

Why it matters: Investors and property owners may face higher tax liabilities when selling assets.

4. Stamp Duty Land Tax (SDLT) Adjustments

• The zero-tax threshold for residential properties has been lowered, meaning more buyers will now pay Stamp Duty.

• First-time buyer exemptions have also been reduced, limiting the relief available on property purchases.

Why it matters: If you're buying property, this means higher upfront costs and could impact first-time buyers trying to get onto the property ladder.

5. Council Tax Increases

• Local authorities in England can raise council tax by up to 4.99% without a referendum.

• This increase affects households, with the average Band D council tax now exceeding £2,170.

Why it matters: Property owners and tenants will see higher costs for local services. Budget accordingly for this increase.

6. Non-UK Domiciled Tax Regime Abolished

• The non-domiciled (non-dom) tax status has been abolished.

• Those who were previously taxed on only UK-sourced income and gains will now be taxed on their worldwide income.

Why it matters: If you are a non-UK domiciled individual, you may now be subject to more stringent tax reporting requirements, potentially increasing your tax liabilities.

7. National Minimum Wage Increase

• The National Living Wage for those aged 21 and over will increase to £12.21 per hour, up from £11.44.

• The under 21 rate increases to £10.00 per hour, with the apprentice rate rising to £7.80.

Why it matters: Employers need to budget for higher wage bills, while workers will benefit from a pay boost.

8. Van Benefit & Fuel Benefit Changes

• Both van benefits and fuel benefits will increase. This affects employees who use company vehicles and receive fuel for private use.

Why it matters: Higher taxes on company vehicles mean both employers and employees need to be aware of the increased costs and review their benefit packages.

Final Thoughts

With so many changes coming into effect from 6 April 2025, it’s essential to stay informed and plan ahead. Understanding how these changes affect your business or personal finances can help you avoid unexpected costs and ensure tax compliance.

Tamara Kuzminska - 56 Accountancy

Is HMRC Watching Your Business? Here’s What Could Raise a Red Flag

When it comes to HMRC, it pays to stay under the radar — in the best way possible. While most businesses are never contacted by HMRC beyond the usual, there are a few habits and red flags that can draw unwanted attention. The good news? They're mostly avoidable with a bit of knowledge and some smart accounting.

Here are 8 common triggers that could put your business in the spotlight — and how to avoid them. 1. Big Fluctuations in Income or Expenses

HMRC expects your financial results to follow some level of consistency. Sudden drops or spikes in income, or unusually high expenses from one year to the next, can stand out — especially if there’s no explanation.

What to do:

If you’ve had a bad year (or a great one), document why. Was there a major contract win? A one-off cost? Poor trading conditions? Make sure your accountant knows, and include explanatory notes in your return if necessary.

Tip: Don’t try to “smooth” numbers to avoid suspicion. Transparency builds trust.

2. Too Many People Representing You

One red flag HMRC often looks for is if too many people are involved in representing you, either when dealing with your account or communicating with HMRC.

What to do:

Limit the number of people who handle your tax matters to ensure clarity and consistency in your records. Too many different people can cause mixed messages or discrepancies in the way your information is handled.

Caution: Avoid having multiple people from your team or advisors making decisions or contacting HMRC on your behalf. It can create confusion, and HMRC may question who is really in charge of your financial affairs.

3. Blurring the Line Between Business and Personal Expenses

It’s okay to claim a proportion of an expense if it genuinely serves both personal and business use (like a mobile phone or home internet). But mixing personal costs into your business expenses without logic can raise red flags.

What to do:

• Only claim the business-use portion of mixed expenses

• Ensure all receipts and bills are in your name or the company’s

• Always pay from a traceable account (not cash-in-hand)

Example: If your phone is 70% used for work, claim 70% of the bill. Keep a log if necessary.

4. Consistently Late Returns or Payments

Late filing or payment doesn’t just lead to penalties — it can make HMRC question how organised your business is.

What to do:

Set calendar reminders, use cloud-based accounting software, or let your accountant handle deadline tracking. Consistency shows professionalism.

Tip: Submit early if possible — it gives time to fix any issues.

5. Operating in Cash-Heavy Sectors

Running a cash-based business (like salons, takeaways, or market stalls) isn’t wrong — but it is viewed as higher risk for underreporting. HMRC pays closer attention to industries where income is harder to track.

What to do:

• Keep detailed daily cash logs

• Bank your takings regularly

• Use digital payments where possible to improve transparency

Tip: Avoid large unexplained cash deposits — always match them to sales.

6. Overseas Transactions or Accounts

Foreign income, investments, or bank accounts are fully legal — but they must be properly reported. HMRC now receives data from over 100 countries through the Common Reporting Standard (CRS), so omissions won’t go unnoticed.

What to do:

Report all overseas income, dividends, and assets

Get professional advice if you receive foreign payments or hold offshore accounts

Don’t wait for HMRC to find out — disclosure builds trust

Remember: You must declare foreign property rental income, too — even if it’s already taxed abroad.

7. Figures That Don’t Match Industry Norms

If your profit margins, turnover, or expenses look way off compared to similar businesses in your industry, it may trigger a closer look — especially if your reported profit is unusually low.

What to do:

Review your figures with your accountant. They can help benchmark your business and check for anything that might look unusual from HMRC’s point of view.

Example: A high-income consultancy firm reporting a loss every year might raise questions.

8. Big Turnover, Low Income — Where’s the Profit?

If your business is generating high revenue but showing very little (or no) profit, HMRC might wonder where the money is going. While this can be totally legitimate — especially in high-overhead sectors — it can still prompt questions.

What to do:

• Track all expenses carefully and be able to explain large outgoings

• Ensure director’s loans, salaries, or large supplier payments are clearly documented

• Regularly review margins with your accountant

Example: If you’re turning over £500,000/year but reporting £2,000 in profit, HMRC may ask why — and whether some income is being underreported or diverted.

Tip: Even if you reinvest profits back into the business, document it clearly in your accounts.

Final Advice

Being "on HMRC’s radar" doesn’t mean you're in trouble — but it does mean your numbers may raise questions. The best defence is honest, clear accounting, backed by professional advice.

If you’re unsure about any aspect of your business’s tax position, don’t leave it to guesswork. At 56 Accountancy, we help small businesses stay compliant, efficient, and audit-proof — so you can get back to growing your business. Tamara Kuzminska - 56 Accountancy

Why Hiring an Accountant is a Smart Move (And What to Watch Out For!)

Running a business is exciting, but let’s be real – keeping track of finances, taxes, and invoices? Not so much. That’s where an accountant comes in. A great accountant can save you time, money, and stress, helping your business grow the right way. But how do you know if you’ve found the right one? Let’s break it down. Why You Should Hire an Accountant

1. Less Stress, More Time for Your Business

Trying to keep up with tax deadlines, receipts, and spreadsheets? That’s hours of your life you’ll never get back. An accountant takes that weight off your shoulders, so you can focus on running (and enjoying) your business.

2. They Save You Money (Legally!)

A good accountant knows exactly how to reduce your tax bill in a legal and ethical way. They’ll make sure you’re claiming the right expenses and not overpaying HMRC. That means more money in your pocket.

3. No More Tax Panic

Late tax filings? Misplaced invoices? One small mistake could lead to HMRC knocking on your door. An accountant ensures your finances are spot-on, so you avoid fines and sleepless nights.

4. They Help Your Business Grow

It’s not just about taxes. A great accountant can help you plan for the future, manage cash flow, and make smart financial decisions. Think of them as a financial coach, not just a bookkeeper.

5. Peace of Mind

Knowing your finances are in expert hands is priceless. You can relax, knowing everything is sorted correctly and professionally.

Green Flags: Signs of a Great Accountant

If you’re looking for an accountant, here’s what to look for:

1. They Keep Things Simple – No confusing jargon. A good accountant explains things in a way that makes sense.

2. They’re Honest and Transparent – Clear pricing, no hidden fees, and realistic advice. You always know where you stand.

3. They’re Reliable and Organised – Deadlines are met, paperwork is in order, and there are no last-minute surprises.

4. They Understand Your Business – Every business is different. A good accountant takes the time to understand your industry and specific needs.

5. They’re Easy to Talk To – You should feel comfortable asking questions. A great accountant is approachable and happy to help.

Red Flags: When to Be Cautious

1. They’re Hard to Reach – If they don’t reply to emails or calls, imagine how stressful tax season will be.

2. They’re Vague About Fees – A trustworthy accountant tells you upfront what their services cost.

3. They Make Mistakes – Your accountant should be on top of things, not causing more problems.

4. They Push You Into Dodgy Tax Schemes – If they suggest something that seems too good to be true, it probably is. Stay clear of anything that could get you in trouble with HMRC.

5. They Don’t Explain Things Properly – If they confuse you rather than help you, they might not be the right fit.

Final Thought

Hiring an accountant isn’t just about ticking a box – it’s about making your life easier and your business stronger. The right accountant will save you time, reduce stress, and help your business grow.

So, if managing your finances feels overwhelming, it might be time to get an expert on board. A good accountant isn’t an expense – they’re an investment in your success.

Need help with your finances? Let’s chat – we’d love to support your business journey. Tamara Kuzminska - 56 Accountancy