The start of a new year brings new opportunities – but only if you’re prepared for the challenges ahead. With revised National Insurance contributions on the horizon and shifting company size thresholds also proposed, business owners must adapt swiftly to stay compliant and protect their bottom line.
Fortunately, with a bit of planning and the right guidance, you can tackle these challenges head-on – setting your business up for success. Here’s what you need to know and how to prepare…
Employers’ National Insurance
What’s changing? From 1st April 2025, the National Insurance rate paid by employers will increase from 13.8% to 15%. The secondary threshold, which is the level at which employers start paying National Insurance, will also be reduced from £9,100 to £5,000 per year.
Why it matters: Any increase in National Insurance contributions (NICs) impacts your payroll expenses, making it essential to review your budgets in anticipation of the increased financial responsibility.
Our advice: Take the time to audit your payroll systems, make sure your budget accounts for the new thresholds, and consider speaking to a specialist to stay compliant.
Minimum wage increase
What’s changing? From 1st April 2025 there will be increases to the National Living Wage of:
- 77p or 6.7% for those aged 21 and over – from £11.44 to £12.21 per hour
- £1.40 or 16.3% for those aged 18-20 – from £8.60 to £10 per hour
- £1.15 or 18% for those aged 16-17 and apprentices – from £6.40 to £7.55 per hour
Why it matters: If you employ staff on entry-level or hourly contracts, this adjustment will likely lead to increased payroll costs. Failure to comply could result in penalties, so it’s important to plan for these changes in advance.
Our advice: Update your payroll systems and review employee contracts to ensure you’re meeting the new legal requirements, then factor the increased costs into your financial planning.
Capital Gains Tax changes: Business Asset Disposal Relief (BADR)
What’s changing? The rate of Capital Gains Tax that applies to Business Asset Disposal Relief and Investors’ Relief is increasing 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.
Why it matters: Entrepreneurs and small business owners considering selling their businesses or assets should take note – these adjustments could significantly impact the financial outcome.
Our advice: If this applies to you, it’s worth chatting to a financial expert or tax advisor. Proper planning can help you minimise liabilities and maximise the benefits of any reliefs available.
Company size thresholds
What’s changing? From 1st April 2025, the size thresholds that determine the classification of companies will increase by 50%. When determining a company’s size, two out of the three thresholds must be breached for two consecutive reporting periods.
The below table sets out the new size thresholds:
| For companies and LLPs | Micro | Small | Medium | Large |
| Two of three: | ||||
| Annual turnover | <£1m | <£15m | <£54m | >£54m |
| Balance sheet total | <£500k | <£7.5m | <£27m | >£27m |
| Average number of employees | <10 | <50 | <250 | >251 |
Why it matters: It’s estimated that the new thresholds will see around 113,000 companies and LLPs moving from the small to micro-entity category, 14,000 moving from medium-sized to small, and 6,000 moving from large to medium-sized. This change is particularly relevant to SMEs; if your business moves to a smaller classification, you may benefit from reduced reporting requirements and compliance obligations.
Our advice: Reevaluate your company’s classification under the new thresholds and update your compliance processes accordingly. If you’re in need of advice, consult with an experienced financial professional.
Making the most of tax allowances
What’s available: Don’t overlook allowances that can save your business money, such as pension contributions, R&D tax credits, and the Annual Investment Allowance. These opportunities can help reduce your tax burden before the financial year comes to a close.
Why now is the time: The approach to the end of the tax year is the perfect moment to take stock of your finances and make sure you’ve used all available allowances.
Our advice: Schedule a financial review with an accountant. They can help identify areas where you can reduce your liability, ensuring all deadlines are met in the process.
Secure your financial future in 2025
As we head into a new tax year, it’s important to stay up to date about changes that could affect your business – a little preparation and expert advice go a long way.
For tailored guidance on how your business can stay compliant, optimise its financial strategies, and confidently navigate the year ahead, get in touch with our team of specialists today. Let’s see where 2025 can take you.
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