Key tax & business changes coming in April 2025: What you need to know

As the new financial year approaches, businesses must prepare for several key tax and financial changes coming into effect from
April 2025. From increased costs to updated compliance rules, here’s a summary of the most significant updates that could impact your business.

1. Employer National Insurance Contributions (NICs) increase

From April 2025, employer National Insurance Contributions (NICs) will increase by 1.2%, rising from 13.8% to 15%. Additionally, the secondary threshold for employer NICs will be reduced from £9,100 to £5,000 per year, increasing payroll costs for many businesses. However, the Employment Allowance will rise from £5,000 to £10,500, providing some relief for eligible employers. Businesses should review their budgets and consider tax-efficient salary sacrifice schemes to mitigate the impact.

2. National Living Wage (NLW) rises to £12 per hour

The National Living Wage will rise to £12.21 per hour for workers aged 21 and over. This is a significant increase and will particularly impact businesses in retail, hospitality, and other sectors that rely on minimum-wage employees. Employers must ensure payroll systems and budgets are updated to reflect the change.

3. Changes to non-domicile taxation rules

The government is abolishing the ‘non-dom’ tax status, meaning long-term UK residents will now be taxed on their worldwide income. This will particularly affect businesses that cater to high-net-worth individuals, such as those in luxury property, financial services, and international trade.

4. Corporation Tax considerations

Corporation Tax remains at 25% for businesses with profits over £250,000, while the Small Profits Rate of 19% applies to profits below £50,000. However, businesses should review their financial strategy to make the most of available reliefs and allowances, such as full expensing for capital investments.

5. Pension auto-enrolment threshold adjustments

Employers should be aware of possible adjustments to auto-enrolment pension thresholds, which could change contribution requirements. Staying informed on these updates will help businesses remain compliant while supporting employee retirement planning.

6. VAT and Making Tax Digital (MTD) compliance

HMRC continues its rollout of Making Tax Digital (MTD), impacting VAT-registered businesses. From April 2025, HMRC will begin writing to sole traders and landlords who they believe may need to comply with MTD for Income Tax Self-Assessment (MTD for ITSA) from April 2026. Businesses should ensure they have MTD-compatible accounting software in place to meet future compliance requirements.

7. Energy efficiency grants & sustainability initiatives

With the UK’s commitment to net-zero targets, businesses may benefit from government grants and tax incentives for adopting sustainable practices, such as investing in solar panels, energy-efficient equipment, and electric vehicles. These incentives could help offset rising operational costs.

How to prepare for these changes

• Review payroll and employment costs – Plan for the increase in NICs and the National Living Wage.
• Optimise tax planning – Make use of available allowances and reliefs to reduce your tax liability.
• Check compliance requirements – Ensure payroll, VAT, and pension policies align with the latest regulations.
• Explore sustainability incentives – Take advantage of grants and tax reliefs for energy-efficient investments.

Need help navigating these changes?

At JW Hinks, our expert accountants and business advisers can help you stay compliant and optimise your tax position. Get in touch today for tailored advice on how these updates will affect your business.