Heads‑Up: April’s Tax Up‑and‑Running
What’s New?
- National Insurance for employers gets a little higher.
- Capital gains tax is tweaked on some transactions.
- The minimum wage finally takes a lift on April 1.
Why It Matters
These changes, mainly drawn from the 2024 Autumn Budget and a handful of recent policy moves, will ripple through payroll, day‑to‑day expenses, and the taxes you owe.
Expert Take
Emma Rivers, Chartered Financial Planner at Evelyn Partners, breaks it down:
“It’s a quiet year for personal tax heads, but businesses—especially those with big staffs—will feel the pinch. The public‑sector wage hike on April 1 means many owners’ profit margins will shrink faster than a CFO’s budget hopes. Those who tie their fortunes to the business will find the coming months a bit rocky, as rising costs squeeze margins and keep risk‑taking at bay.”
Key Points for Business Owners
- Expect payroll to climb: your employer NICs are up.
- In capital gains situations, be ready for higher rates on select deals.
- Deal with a higher minimum wage cost—all the more reason to re‑think staffing levels.
- Many small shops are leaning toward price hikes, staff cuts, or even halted expansion plans.
As Emma cautions, the government’s fiscal juggle may not ease soon—so brace yourself, plan ahead, and keep those contingency funds as a safety net.
Employers’ National Insurance Contributions to increase
What You Need to Know About the 2025 NIC Shake‑up
Starting 6 April 2025, employers will suddenly find their National Insurance (NI) bills have grown bigger than a X‑box in a snowstorm.
Rising Rates & Lower Thresholds
- NI rate jumps from 13.8% to 15.0%.
- Exemption threshold falls from £9,100 to £5,000 per employee.
- Example: a company with 10 staff earning £30,000 each could see its NIC liability climb by £8,658 per year.
Employment Allowance: The “Silver Lining”
- Current allowance: £5,000 for firms with a NIC bill ≤ £100,000.
- From 6 April 2025 it rises to £10,500 and the £100,000 cap disappears.
- Still, roughly 1.3 million PAYE‑registered businesses will face the extra NIC cost.
How Small Businesses Are Reacting
- FBS poll 2024: 33 % of small employers plan to cut staff, up from 17 % last quarter.
- Tax changes are the main reason.
Time to Consider a Salary‑Sacrifice Pension Scheme
- What it is: an employee gives up part of their pay for non‑cash perks (like a pension contribution or bonus).
- Benefits aren’t taxed, so NICs drop for the employer and take‑home pay rises for the employee.
- Emma says: “It’s a win‑win. Yet many firms still don’t use it.”
- Tip: if it makes sense for you, look into a salary‑sacrifice pension scheme to offset the NIC load.
Bottom line – the NIC hike is a real challenge, but with clever structuring like salary sacrifice, both chains and workers can still keep the wheels turning without burning out the budget.
Capital gains tax rates to increase
New Tax Rules: The Capital Gains Chronicles
Strap in, entrepreneurs and pocket‑book lovers – the tax office just pulled the trigger on a few big changes that might feel like a plot twist in a thriller.
Capital Gains Tax: The Immediate Shake‑Up
Most people’ve heard that the basic rates for capital gains tax (CGT) just jumped up right on the budget day. The government decided to tighten the belt a touch to keep up with the rising prices around us.
BADR: Business Asset Disposal Relief Gets a New Face
Good news? The old Entrepreneurs’ Relief is still there, but it’s been renamed BADR – Business Asset Disposal Relief. If you’re selling a piece of your empire, read this carefully.
- Starting 6 April 2025 – the tax rate on the gains that qualify for BADR jumps from 10 % to 14 %.
- From 6 April 2026 onward – it climbs again to 18 %.
- The lifetime limit stays at £1 million, so you’re still capped on how much you can shed tax‑free.
Let’s crunch a quick example to keep it real: a £500,000 gain looks like this:
| Year 2024‑25 | Tax payable: £50,000 (10 %) |
| Year 2025‑26 | Tax payable: £70,000 (14 %) |
Why are we tightening the screws on CGT?
Historically, the government has kept CGT lower than regular income tax. The idea? Investors take gutsy risks, throw money into ventures, and hope for the best. If you’re all‑in, you can probably survive a few bumps in the market.
Now with these fresh rates, the stakes have risen a bit. But think of it as the tax‑office saying: “Hey, you’re taking chances, so we’re giving you a little more cushion, but let’s keep the money in the pot.”
Why BADR matters to the real backbone of the economy
Bad business owners don’t just build companies; they build futures. Many have poured everything into their businesses and now look to sale proceeds as the lifeline for their families. That’s the human side of the number crunches. If your business is yours from the ground up, BADR pulls you out of the nitty‑gritty of taxes so you can keep your family happy and safe.
It’s a tightrope walk, but with the right flips, you can glide from startup to success without getting tripped up by the tax‑chain.
Minimum wage increases
Living Wage Leaps Forward: New Pay Perks for Workers
The National Living Wage is getting a tidy boost – a 6.7% jump that will bump rates from £11.44 to £12.21 for those over 21, and from £8.60 to a neat £10 for 18‑to‑21‑year‑olds, effective 1 April.
What It Means for Businesses
- Employers need to update payroll systems no later than 1 April 2025 to stay on the right side of the law.
- With simultaneous tax hikes and trembling consumer confidence, the raised wage could cool the growth engines of some firms.
- Leisure and hospitality, still nursing post‑pandemic wounds, are the most vulnerable. Staffing their lots of staff with higher wages might make some managers rethink hiring or even skirting labor‑intensive gigs.
Emma’s Take
“Employers must update payroll systems by 1 April 2025 to remain compliant,” Emma warns. “In the context of the tax increases afoot for businesses and faltering consumer confidence, the increase to the minimum wage could inhibit growth for some businesses. Particularly those in leisure and hospitality that are staff-heavy and still suffering from other headwinds since the shock of the pandemic. Wage bill increases could discourage some entrepreneurs from further hiring decisions, or indeed to avoid labor‑intensive operations altogether.”
Bottom Line
While workers cheer the higher pay, businesses brace for the ripple effect. It’s a balancing act: more money in pockets versus tighter budgets in bustling shops.
Abolition of Furnished Holiday Lettings (FHL) tax regime
What Happens When the FHL Tax Regime Ends?
Emma keeps it straight to the point: Starting 6 April 2025, the Finance‑Holding‑Lease (FHL) tax rules will be dismantled. If you’re running a short‑term rental, like a holiday cottage, that shift could mean bigger tax bills and a simpler—but not so friendly—tax treatment. In short, your profits might take a hit.
Why It Matters for Your Business
- No Capital Allowances – Those tax breaks for buying and upgrading property equipment vanish.
- No Specific Loss Reliefs – You can’t offset losses against other income the same way.
- Higher Tax Liabilities – The tax you pay on rental income will rise.
- Simpler Tax Rules – Easier to comply with but less advantageous.
The Cash‑Flow Crunch
Emma warns, “Entrepreneurs often end up dipping deep into their own wallets to keep the business afloat.” If you’re one of those who rarely pile up a cash reserve, this shift could force you to pay more out of pocket, postpone pension savings (or not save at all). Imagine your finances turning into a scramble for a caffeine fix – it’s exhausting.
Evelyn Partners’ Customized Help
At Evelyn Partners, we know that business owners have unique challenges that differ from salaried employees. We bring:
- Cash‑Flow Modelling – Predict your financial runway.
- Tax Planning – Get the most you can from the new rules.
- Bespoke Investment Advice – Grow your wealth strategically.
With this tailored approach, we aim to help you get through tough times and keep your future on track.
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