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.
- 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.
- 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.
- 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.
- 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.
- 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.