A year of changes and more to come.
The last year has seen a number of changes in Tax. Qualification boundaries have changed, new tax regimes have been announced, some have been completely overhauled. It’s a lot to consider, so we have produced a short summary of the most relevant changes.
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Tax & Accounting
A year of changes and more to come
The last year has seen a number of changes in Tax. Qualification boundaries have changed, new tax regimes have been announced, most notably, Making Tax Digital for Income Tax, and some tax regimes have been completely overhauled, including the Furnished Holiday Let scheme.
It’s a lot to consider, so we have produced a short summary of the most relevant changes.
There isn’t long left until the end of the current, 2024-2025, Tax Year on 5th April 2025. Take a look down our to-do list and see if there are any last minute changes you can make to help save you tax in the coming year.
This years’ main tax (and other) changes and announcements
Late Payment Penalty Changes from 6th April 2025.
From April 2025, penalties for late payments will increase for both VAT and Income Tax Self Assessment taxpayers.
The new rates will be as follows:
- 3% of the outstanding tax if it’s overdue by 15 days or more.
- 3% when overdue by 30 days plus.
- 10% per annum when overdue by 31 days or more.
High Income Child Benefit Charge Changes to Reporting and Payments.
From summer 2025 employees AND directors who only need to pay the High Income Child Benefit Charge will be able to report and pay it through a new digital portal via PAYE rather than Self Assessment (unless you are self-employed).
Making Tax Digital for Income Tax (MTD IT) starts 6th April 2026.
Who?
Sole Traders and Landlords with personal property whose qualifying income (combined turnover – not just profit) is £50k or over.
The Furnished Holiday Lets (FHL) Tax Scheme will be abolished on 5th April 2025.
Who?
Individuals, corporates, and trusts who operate or sell furnished holiday lettings (FHLs).
The rate of employers National Insurance contributions (NICs) will rise from 13.8% to 15% on 6th April 2025.
In addition, the threshold at which employers start to pay NICs (known as the secondary threshold) will decrease from £9,100 to £5,000 per year.
Employment Allowance will be increased for businesses from £5000 to £10,500 per year from 6th April 2025.
The £100,000 threshold will also be removed, meaning that eligibility for the allowance is not restricted to employers with a prior tax year secondary NIC liability of £100,000 or less.
Action?
Eligible employers can offset the employment allowance against their NIC liability, potentially reducing it to £nil.
Businesses with Director only salaries may no longer be eligible for Employment Allowance from 6th April 2025.
Who?
- only one employee (or director) in the limited company is paid above the Secondary Threshold
- that employee is a director of the limited company
Action?
Consider lowering directors salaries from April 2025 to £5,000 to avoid attracting Employers NI.
Changes to Agricultural Property Relief (APR) and Inheritance Tax (IHT).
From 6 April 2026, the full 100% relief from inheritance tax will be restricted to the first £1 million of combined agricultural and business property.
Above £1m, landowners will access 50% relief from IHT and will pay IHT at a reduced effective rate up to 20%, rather than the standard 40%.
HMRC say “This is on top of all the other spousal exemptions and nil-rate bands that people can access for inheritance tax too. This means that two people with farmland, depending on their circumstances, can pass on up to £3 million without paying any inheritance tax.
This is an assumption based on the £1 million limit and nil-rate bands and does not take into consideration the specific circumstances that may affect the tax calculation”
Business Property Relief (BPR) and Agricultural Property Relief (APR).
From April 2026, agricultural property relief and business property relief will be reformed, with the highest rate of relief remaining at 100% for the first £1m of combined business and agricultural assets on top of the existing nilrate bands.
After £1m, 20% IHT will be charged on transfers of qualifying Business Property and Agricultural Property worth more than £1m.
This is a combined cap for both reliefs. Broadly, the new tax charge will apply in three scenarios: (not just when someone dies)
- On the death of an owner of such property.
- On the death of a donor of such property within seven years of an outright gift (under the well-established potentially exempt transfer (PET) regime) – this charge is levied on the recipient of the gifted property unless the donor’s Will specifies otherwise.
- On the gift into trust of such property during the lifetime of the donor/settler.
Changes to Capital Gains Tax.
- CGT rates will increase from 10% to 18% for basic rate taxpayers, and from 20% to 24% for higher rate taxpayers, matching existing rates for property which stay the same.
- Rates on chargeable gains from selling additional property remain unchanged at 18% and 24%, respectively.
- Business Asset Disposal Relief (BADR) will remain at 10%, before rising to 14% on 6 April 2025, and 18% from 6 April 2026.
- Carried interest is a share of profits earned by general partners of private equity, venture capital, and hedge funds, based on their investments.
The tax treatment of carried interest will be reformed by increasing CGT rates on carried interest to 32% (currently 28%) and then, from April 2026, moving to a revised regime. This regime is now Under Consultation and further details will be provided in due course.
Changes to SDLT.
The higher rate for additional dwellings surcharge of SDLT in England and Northern Ireland rose from 3% to 5%, from 31 October 2024. Further changes are due:
- SDLT thresholds will reduce to 125K and First Time Buyers down to 300K from April 2025.
- Single transactions over 500K increased from 15% to 17%
Identity verification changes at Companies House for officers of limited companies
To continue implementing the changes outlined in The Economic Crime and Corporate Transparency Act (ECCTA), Companies House have issued new rules, regulations and standards for a Limited Company and its officers (Directors, Persons of Significant Control (PSCs), including Shareholders who hold a more than 25% of the shareholding for a company).
Some of these changes have already been introduced, including:
- Using an appropriate address as a registered office for your company.
- Using an official company email address for your company.
- Agreeing, on behalf of your company, that you and the company are acting lawfully.
Further changes are being introduced from March 2025.
Companies House will have begun emailing and writing to you about these changes.
These include:
- Identity verification of all Directors, PSCs and Shareholders for a company for both EXISITING and NEW companies.
Tax Year To Do List
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