Business Taxes:
Firms will pay National Insurance (NI) on workers’ earnings above £5,000 from April, down from £9,100, with the rate increasing from 13.8% to 15%.
The Employment Allowance, allowing companies to reduce their NI liability, will increase from £5,000 to £10,500.
The main rate of corporation tax, for businesses on taxable profits over £250,000, will remain at 25% until the next election.
Minimum wages will rise to £12.21 an hour for those over 21 starting in April.
Capital Gains Tax (CGT) will increase from 10% to 18% on the lower band and from 20% to 24% on the higher band.
Business Asset Disposal Relief retains its £1m allowance, but rates will increase to 14% from 6th April 2025, and will increase again to match the lower main rate at 18% from 6th April 2026 - example calculations below:
Assuming a £2,000,000 business sale:
If sold today:
First £1m taxed at 10% (total tax: £100,000)
Next £1m taxed at 20% (total tax: £200,000)
Total tax bill: £300,000
If sold in April 2025:
First £1m taxed at 14% (total tax: £140,000)
Next £1m taxed at 24% (total tax: £240,000)
Total tax bill: £380,000
If sold in April 2026:
First £1m taxed at 18% (total tax: £180,000)
Next £1m taxed at 24% (total tax: £240,000)
Total tax bill: £420,000
Personal Taxes:
Dividends remain untouched.
Fuel duty is frozen.
Income tax and NI thresholds will be frozen until 2028, this is potentially moving people into higher tax bands as wages rise as a result of fiscal drag.
The rates on residential property sales will remain at 18% and 24%.
Inheritance tax thresholds will be frozen and extended beyond 2028 to 2030.
The Non-Dom tax regime will be replaced with a new, residence-based scheme; details are yet to be released.
Stamp duty on additional homes will increase from 3% to 5% starting today.
The government will bring unused pension funds and death benefits payable from a pension into a person’s estate for inheritance tax purposes from 6th April 2027.
The State Pension triple lock will be maintained for the duration of this parliament. Basic and new State Pensions will increase by 4.1% from April 2025, in line with earnings growth.
Private school fees will be subject to VAT at the standard rate of 20%.
AIM, EIS and BPR investments are now subject to 20% IHT, previously they were fully exempt. BPR assets should benefit from the new £1m allowance that was announced but we are waiting on EIS and AIM investments.
Solutions:
The biggest impact on businesses will come from the NI increases, particularly for those with five or more staff. For a business with a £500k payroll and 10 staff, this could cost an additional £12,500 annually. A comprehensive remuneration planning exercise is recommended, including reviewing dividends versus salary for directors.
The Labour Government aims to free up housing by keeping CGT on residential properties at flat rates, encouraging property owners to sell. The increase in stamp duty will likely decrease the number of “new landlords”.
Utilising group structures and group reliefs can be a valuable tool for business tax planning, especially for succession planning or selling a business.
For managing CGT, we have been crystallising profits for clients this tax year and reinvesting while taking advantage of lower rates.
Pensions planning remains complex, and our tax advisory and wealth management teams are equipped to provide tailored guidance.
If you're considering an exit strategy for your business, you may want to accelerate your plans.