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New tax year, may require new strategies

As the new tax year begins on 6 April 2025, small business owners across the UK are facing a mix of fresh challenges and valuable opportunities. With new rules coming into effect, now is a great time to take stock, plan ahead, and make the most of what’s available.

  1. Higher Employer National Insurance Contributions

From April 2025, employer National Insurance contributions have risen from 13.8% to 15%, and the threshold for paying NICs has dropped from £9,100 to £5,000. This will increase the cost of employing staff, particularly for those on lower wages.

Opportunity: The good news is that the Employment Allowance has also been increased, from £5,000 to £10,500, and the previous £100,000 eligibility cap has been scrapped. Many more small businesses can now reduce their NIC bill, so it’s worth checking eligibility.

  1. Minimum and Living Wage Rises

The National Living Wage for those aged 21 and over is now £12.21 per hour. There are also substantial increases for younger workers and apprentices, which will affect payroll costs for employers in sectors like retail, hospitality, and care.

Opportunity: It’s vital to review payroll systems to ensure compliance. At the same time, this is a good prompt to examine wider staffing strategy, operational efficiency, and pricing to maintain profit margins.

  1. Capital Gains Tax Changes

The lower rate of Capital Gains Tax has increased from 10% to 18%, and the higher rate has risen from 20% to 24%. This will particularly affect business owners considering the sale of assets or shares.

Opportunity: Timing is key. If a disposal is on the horizon, taking advice and possibly bringing it forward or restructuring the deal could help reduce your tax exposure.

  1. New Late Payment Penalties

From April, tougher penalties apply for late tax payments. These include a 3% charge once a payment is 15 days late, a further 3% at 30 days, and 10% interest annually from day 31.

Opportunity: Now’s the time to tighten up financial processes. Cash flow forecasting, automated reminders, and setting up direct debits can help avoid costly penalties.

  1. Other Changes to Watch

The non-dom tax regime is being phased out, and changes to Business Asset Disposal Relief and R&D tax credits are underway. If you’re affected by any of these, seek tailored advice sooner rather than later.

Final Thoughts

There’s a lot going on this year, but with good planning and a proactive approach, small business owners can turn tax year changes into opportunities for growth and stability.

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