The new tax and financial year always sees a plethora of previously announced tax changes take effect; 6 April 2025 (the 2025/26 tax year) and the start of the new Financial Year 2025 on 1 April 2025 are no different. Tax thresholds also remain frozen again. The key changes to be aware of are set out below.
Employer National Insurance Contributions (NICs)
After the National Minimum Wage increased from 1 April, from 6 April 2025, the rate of Employer National Insurance Contributions (NICs) increased from 13.8 percent to 15 percent and the 0 percent Employer NICs threshold reduced from £9,100 to £5,000, although the Employer NICs employment allowance increased from £5,000 to £10,500.
These changes take affect after the National Insurance Contributions (Secondary Class 1 Contributions) Bill 2024-25 finally received Royal Assent last week after amendments proposed by the House of Lord were rejected by the House of Commons.
Furnished holiday lets
From 1 April 2025 for corporation tax and 6 April 2025 for income tax, the furnished holiday lets (FHL) regime has been abolished and former FHL properties now form part of the taxpayer’s UK or overseas property business and are therefore subject to the same rules as other let property businesses. If a property was a FHL this previously had beneficial implications for its tax treatment.
Non-domiciled regime abolished
From 6 April 2025, the rules for the taxation of non-UK domiciled individuals, and specifically the remittance basis (RB) for foreign income/gains, came to an end and are replaced by a tax residence based system.
The new regime provides 100 percent relief on foreign income/gains for new arrivals to the UK in their first four years of UK tax residence provided the individual was not resident in any of the 10 prior consecutive years. A new Temporary Repatriation Facility is also available for individuals who previously claimed the RB.
The domicile-based system of IHT has been replaced with a new residence-based system for long-term residents owning non-UK property not previously within the scope of UK IHT.
Capital gains tax (CGT)
As a result of the increased rates of CGT from 30 October 2024, Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) both increased from 10 percent to 14 percent from 6 April 2025 and both will further increase to 18 percent from 6 April 2026.
The lifetime limit (LL) for BADR remains at £1 million. In contrast, the LL for IR reduced from £10 million to £1 million for all qualifying disposals made on or after 30 October 2024.
Double cab pick ups
From 1 April 2025 for corporation tax and 6 April 2025 for income tax and NICs purposes, HMRC treats most double cab pick-ups (DCPUs) as cars, and not vans, for direct tax purposes. Previously HMRC treated a DCPU with a payload of one tonne or more as a van for the purposes of benefit-in-kind calculations, capital allowances, and certain deductions from business profits. From April 2025, a vehicle is only treated as a van if the construction of the vehicle at the time it was made means that it is primarily suited for the conveyance of goods.
Stamp Duty Land Tax
From 1 April 2025, the Stamp Duty Land Tax threshold for residential land and property reduced from £250,000 to £125,000. The threshold for first-time buyers fell from £425,000 to £300,000 and the maximum value of property to benefit from the first-time buyer threshold reduced from £625,000 to £500,000.
Increased interest rate for late payment and increased late payment penalties
As announced at last Autumn’s Budget, from 6 April 2025 the rate of interest HMRC applies to late payments of most taxes and duties increased from 7 percent to 8.5 percent. This is following the introduction of regulations which make amendments to various pieces of legislation to apply the Bank of England (BoE) official rate of interest plus 4 percent going forward, rather than the BoE official rate plus 2.5 percent. Late payment penalties have also increased as announced in the Spring Statement.
Miscellaneous
Electric, zero and low emission cars, vans and motorcycles are now subject to the vehicle tax rates that were introduced on 1 April 2025. This change applies to both new and existing vehicles. The amount due depends on the type of vehicle and when it was registered. The most expensive electric vehicles (EV) costing over £40,000 will be charged £600 per year from the second year, including the £410 expensive car supplement. Non-EV road tax rates generally increased in line with inflation.
Company car tax is also higher in 2025/26. Rates on EVs are 3 percent, gradually rising 1 percent per year to 9 percent by 2030. Air passenger duty (APD) rates have also increased with domestic flights subject to £8 for a one-way flight for the reduced rate, up to £16 for the standard rate. The APD rates for larger private jets with over 19 seats increases by an additional 50 percent.
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