Staying on top of taxes and rates can be tricky. Just as you get all your ducks in a row for one year, it isn’t long before a new wave of announcements rolls in. This is where agile planning becomes invaluable.
Now that the dust has settled from the Autumn Budget, it’s time to take stock of the incoming changes and prepare your business accordingly. Our advice? Don’t let changes happen to you – get ahead of them now so you’re ready to adapt and thrive in 2025.
Minimum wage rate increases
From April 2025, the national minimum wage will rise from £11.44 to £12.21 for over 21s (6.7% increase), from £8.60 to £10 for 18 to 20-year-olds (16.3% increase), and from £6.40 to £7.55 an hour for apprentices (18% increase). Meanwhile, the minimum wage for 16 to 17-year-olds will remain the same at £6.40.
These are the biggest increases on record to the national minimum wage, and it’s thought that hospitality businesses will be most affected. To avoid a shock in April 2025, we advise that you reassess the ages of your employees to determine who will be paid at a higher wage rate and what proportion of your staff fall into the larger increases.
National Insurance reforms
Another big change around the corner is to Class 1 National Insurance Contributions (NICs). From April 2025, the rate at which employers pay NICs will increase by 1.2% from 13.8% to 15%. Meanwhile, the threshold at which employers start paying NICs on an employee’s salary will fall from £9,100 to £5,000.
While many businesses will be worried about the increases, the government has estimated that over 1 million employers will pay the same amount of National Insurance and 865,000 employers won’t pay any at all. This is partly down to a ‘protection’ for very small businesses that will see the Employment Allowance increase from £5,000 to £10,500.
Business rates changes
First introduced in April 2023, business rates are now based on a new rateable value taking into account changes in property value since 2017. At the time, the government provided relief through this transition for retail, hospitality, and leisure businesses set at 75% and capped at £110,000. This relief will drop to 40% for the 2025-26 tax year. Use the government’s online calculator to better understand business rates and estimate what you’ll pay in the new tax year.
Vehicle tax for electric and low emission vehicles
From 1st April 2025, drivers of electric and low emission cars, vans and motorcycles will need to pay vehicle tax in the same way as drivers of petrol and diesel vehicles. This change will apply to both new and existing vehicles. The rate you pay will depend on the type of vehicle you have and when you purchased it. If you own or plan to invest in electric or low emission vehicles for your business, learn how much tax you’ll be required to pay here.
Capital Gains Tax increases
Finally, if you’re looking to sell a business in the coming years, it’s worth noting changes to Capital Gains Tax. The rate that applies to Business Asset Disposal Relief will increase from 10% to 14% for disposals made on or after 6th April 2025, and from 14% to 18% for disposals made on or after 6th April 2026.
Get ahead in 2025 with Nabarro Poole
Keeping an eagle eye on key taxes and rates is vital to ensure you’re protected from nasty surprises and remain profitable in ever-changing economic conditions. That being said, the busy day-to-day running of a business can get in the way, which is why you need an accounting expert you can trust.
At Nabarro Poole, we won’t just help you identify which changes apply to you – we’ll simplify the ways in which they could affect your business while giving you actionable advice on how you can mitigate or make the most of them. Get in touch with us today for peace of mind going into 2025.
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