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

56 ACCOUNTANCY