National Insurance.

From April 2025, significant adjustments to National Insurance will directly impact employer costs.

Employer NI Contributions: The rate for Employer National Insurance (Secondary Class 1 NIC) will rise from 13.8% to 15%. This increase will affect most employers, raising the overall cost of employment.

Lower Secondary Threshold (ST): Employers will start paying NI contributions on earnings above £5,000 per year (or £96 per week), down from the current threshold of approximately £9,100 per year. This change means employers will pay NI on a broader portion of wages, increasing costs, especially for lower-paid employees.

Employment Allowance: To help mitigate the impact for smaller businesses, the Employment Allowance will increase from £5,000 to £10,500. Eligible employers can offset this allowance against their NIC liability, potentially reducing it to zero. Additionally, the £100,000 threshold on eligibility will be removed, so businesses with a prior tax year NIC liability over £100,000 can now also qualify.

Upper Secondary Thresholds (UST): The UST remains unchanged for specific groups: it’s set at £25,000 for special tax sites (e.g., investment zones and freeports) and £50,270 for those under 21, veterans, and apprentices under 25.

Employers can take advantage of these thresholds where applicable to reduce costs for eligible employees.

Increasing the interest rate on unpaid tax.

The increase to the late payment interest rate charged by HMRC on unpaid tax liabilities will rise by 1.5% to Bank Rate plus 4%.

This measure will be effective from 6 April 2025.

Minimum Wage Increase: Minimum wage rises 6.7% to £12.21 for adults and 16.3% to £10 for younger workers, raising payroll expenses.

Capital Gains Tax: The lower rate increases from 10% to 18%, and the higher rate from 20% to 24% effective 30 October 2024.

Rates on property remain the same, and the lifetime limit for Business Asset Disposal Relief stays at £1 million.

Corporation Tax: Corporation tax will remain at 25% for the remainder of this parliament.

Non-Dom Status Removal.

Abolition of non-dom tax status increases UK tax exposure for affected clients.

Inheritance Tax (IHT).

IHT thresholds remain frozen until 2030, and inherited pensions will be subject to IHT from April 2027.

Agricultural Property Relief (APR) and Business Property Relief (BPR) of combined agricultural and business property with remain at 100% for the first £1 million. The rate then drops to 50% for shares “not listed” on the markets of recognised stock exchanges (e.g. the Alternative Investment Market (AIM) – Effective from 6 April 2026.

Unused pension funds and death benefits payable from a pension will be brought into a person’s estate for Inheritance Tax (IHT) purposes – Effective from 6 April 2027.

The Nil-Rate Band and Residence Nil-Rate Band thresholds will be fixed at £325,000 and £175,000 respectively for tax years 2028-29 and 2029-30. The Residence Nil-Rate Band taper will also be fixed at the current level of £2 million.

Mandatory registration of tax practitioners interacting with HMRC

It is the government’s intention that, from April 2026 onwards, all practitioners who interact with HMRC on behalf of a client will have to register with HMRC before doing so. HMRC will apply checks to all tax practitioners who register.

VAT on Private School Fees.

From 1 January 2025, fees will carry standard rate VAT.

Eligibility of private schools for charitable business rate relief will be removed from 1 April 2025.

Stamp Duty Land Tax Surcharge on Second Homes.

Known as the “Higher Rate for Additional Dwellings,” this surcharge will rise by 2 percentage points to 5%.

Changes Affecting Non-Domiciled Individuals.

The UK is abolishing the remittance basis of taxation for non-domiciled individuals and replacing it with a simpler residence-based regime. Under this new system, individuals who opt in will not pay UK tax on foreign income and gains (FIG) for the first four years of their tax residence, provided they were non-tax resident for the previous 10 years.

Key changes include

• Inheritance Tax: A new residence-based system will be introduced.
• Foreign Income: The planned 50% reduction in foreign income subject to tax in the first year will be eliminated.
• Capital Gains Tax: Current and past remittance basis users can rebase personally held foreign assets to 5 April 2017 on disposal, subject to certain conditions.
• Overseas Workday Relief: This will be extended to four years, with an annual financial limit of the lower of £300,000 or 30% of net employment income.
• Temporary Repatriation Facility: The facility will be extended to three years and its scope expanded to include trust structures.These changes aim to simplify the tax system for non-domiciled individuals while ensuring fair taxation.

Tax on company cars

• Fully electric and zero emission vehicle rates will increase by 2% per annum across 2028-29 and 2029-30.
• Rates for cars with emissions of 1-50g/km of CO2 will increase to 18% in 2028-29 and 19% in 2029-30.
• Rates for all other emission bands will increase by 1% per annum to maximum of 38% for 2028-29 and 39% for 2029-30.
• Van Benefit Charge will increase in line with September 2024 CPI growth.

Amending anti-avoidance rules for close company shareholders

Section 455 ‘Loans to Participators’ legislation will be amended to prevent close companies recycling loans through two or more companies to avoid tax.

This measure will be effective from 30 October 2024.

Changes to tax rules on liquidations of Limited Liability Partnerships

Where a member of a Limited Liability Partnership (LLP) has contributed assets to an LLP, chargeable gains that accrue up to the contribution are taxed (either Capital Gains Tax or Corporation Tax) when the LLP is liquidated and the assets are disposed of to the member, or to a person connected to them. The LLP will be liable in the normal way for gains from the time of contribution on their actual disposal of the asset.

This measure will be effective from 30 October 2024.

Strengthen existing charity tax rules from April 2026.

Several changes to legislation to aid compliance with charitable tax reliefs include:

• Tainted Donations: To strengthen HMRC compliance powers to take action when a donor gives to a charity with the intention of receiving an advantage back.
• Approved Investments: To make it explicit that all investments by charities that qualify for charitable tax reliefs must be for the benefit of the charity and not the avoidance of tax.
• Attributable Income: To extend the existing rule that charities’ tax relieved income must be spent on charitable activities to income received from legacies.

These measures will be effective from April 2026.

Business rates.

40% business rates discount available to businesses occupying eligible retail, hospitality and leisure properties in England, up to a cash cap of £110,000 per business for one year.

The small business multiplier will be frozen at 49.9p for 12 months.

These measures will be effective from 1 April 2025.

Other key announcements were as follows.

• Subscription limits for Adult ISAs, Junior ISAs and Child Trust Funds will be maintained
  100% first-year allowances for zero-emission cars and electric vehicle charge-points extended to 31 March 2026 for Corporation Tax and 5 April 2026 for Income Tax
• Changes to tax rules on alternative finance arrangements from 30 October 2024
• Increase in the Carer’s Allowance earnings limit to the equivalent of 16 hours at the National Living Wage from April 2025
• Extension of employer NICs relief for hiring veterans for one year from 6 April 2025
• The Starting Rate for Savings (SRS) will be maintained at £5,000 for 2025-26
• Measures to make recruitment agencies responsible for accounting for PAYE on payments made to workers that are supplied via umbrella companies from April 2026
• Confirmation of the payrolling of employment benefits from April 2026
• HMRC to recruit 5,000 additional compliance staff by 2029-30
• HMRC to recruit 1,800 additional debt management staff