Lots on the tax agenda
Despite the uncertain economic environment at the moment, Rachel Reeves has promised to hold only one ‘fiscal event’ each year, so we are not expecting any further tax announcements until the Autumn Budget. However, many tax changes are now scheduled for April and others for a year later, so you can’t take your eyes off the tax ball without it potentially costing you dearly. In this newsletter, we look at the impact of some of these changes as well as keeping you up to date with other developments.
We begin with the tax changes announced concerning double-cab pickup vehicles, which will be very significant for those who use them in their business.
In "Employers NICs increases on the way", we discuss the impact of the big increase in employers’ National Insurance Contributions (NICs) that takes effect in April along with a 6.7% increase in the National Living Wage. Both these will increase the costs of employing someone, often very significantly, although we remind you of the reliefs that are available to mitigate employers’ NICs too.
This NICs increase is one of several different tax changes in recent years (starting in the days when George Osborne was Chancellor) that have changed the tax landscape for owner-managed businesses. We discuss in "Time to disincorporate?" why a limited company may, in some cases, no longer be the most appropriate business structure to have.
Other topics that we mention include research and development, where HMRC has introduced a special disclosure facility for those who have inadvertently overclaimed tax relief in the past, and the upcoming increase of 1.5 percentage points in the annual rate of interest on tax paid late.
There are many other issues that we could have included (and no doubt will include in future newsletters) that may also affect you or your business. There has been a lot of publicity over the potential Inheritance Tax (IHT) increases that many farmers will face from April 2026. What has not been so well reported is that the changes will affect most other businesses as well. If you have a family trading company, under the current proposals, some IHT will be payable if the value of the shares that you are leaving on death exceeds £1m. Although we await the final legislation (the proposals are not in the current Finance Bill) it may be sensible to get ahead of the game and look at how you might want to change your Will. You may even want to bring forward plans to gift the shares to a child, as there is still complete exemption from IHT for lifetime gifts where the donor survives at least 7 years.
A year further on, in April 2027, the IHT rules on pensions are expected to change too, so IHT is going to be an important topic over the coming years.
Some other changes are happening well before then. Having put up most CGT rates from Budget Day, the rate of tax on disposals eligible for Business Asset Disposal Relief (BADR) rises from 10% to 14% from 6 April 2025, before increasing to 18% a year later.
A temporary reduction in the normal Stamp Duty Land Tax (SDLT) rates expires on 31 March 2025. Up to that date, the first £250,000 is charged at nil; from 1 April 2025, the band from £125,001 to £250,000 will once again be charged at 2%. There is also a reduction in the thresholds for first-time buyer relief: from 1 April 2025, the nil rate will apply to the first £300,000 of a property costing up to £500,000, down from the first £425,000 of a property costing up to £625,000.
For the self-employed and landlords, the much more onerous reporting requirements of Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) will start being phased in from April 2026.
There is not much good news on the tax front, but we are here to help you navigate these changes and to keep your tax bills as low as we can. Please contact us if you want to discuss anything raised in this Newsletter.
