Tax Changes for 2025

The first changes to UK tax legislation comes in force on 1st April 2025.  This is the changes to stamp duty which reduces the 0% rate band for residential property to £125k (currently £250k), with three extra tiers as below.   Note that if you are buying property and it is not your main home, or you are buying as a limited company then there is 3% added to each band.

For first time buyers, the 0% band will be reduced to £300k for properties valued up to £500k.

Also from 1st April NMW increases are due as detailed in the table below:

From 6th April the new employer NI rates apply, these rates are 15% on employee earnings over £5k.  All businesses will now have access to a maximum £10.5k employment allowance which goes against employer NI.  There are exceptions for the employers allowance with the main one being that it is not available where the company only employs a director.

From 6th April 2025 the Furnished holiday let tax reliefs end.  There are no longer 100% deductible mortgage interest costs, no capital allowances, income is not included as pensionable earnings and the biggest - business asset disposal relief (BADR) is no longer available.  This means that a 10% capital gains tax on the disposal of a holiday let becomes 18% for lower rate earners and 24% for higher rate.

BADR will still be available where the property has ceased being a holiday let prior to 6th April 2025 and is sold within 3 years, although note the rate of tax increases from 10% to 14% (18% from April 2026).

From 6 April 2025, HMRC will no longer align its interpretation of the terms “car” and “van” for tax purposes with the definitions used for VAT purposes. Under the VAT approach double cab pickups are classified based on payload capacity, with anything under one tonne classified as a car, and anything a tonne and over as a van. This rule was replicated as a pragmatic way of resolving the primary suitability and classification of double cab pickups. 

Transitional arrangements will apply for employers that have purchased, leased, or ordered a double cab pickup before 6 April 2025, whereby they will be able to rely upon the previous treatment until the earlier of disposal, lease expiry, or 5 April 2029.  

More information can be found here: EIM23151 - Car benefit: double cab pickups 6 April 2025 onwards - HMRC internal manual - GOV.UK

Changes to the taxation of non-UK domiciled individuals - 6th April 2025

The remittance basis of taxation for non-UK domiciled individuals will be replaced from

6 April 2025 with a residence-based regime, the foreign income and gains (FIG) regime. This regime will only be available during the first four years of tax residence, and will make all foreign income and gains exempt from UK tax. There is a temporary repatriation facility for those who will fall out of the remittance basis and outside of FIG on 6th April 2025. The repatriation facility has complex rules, too much to run through on this blog.

If you have used the remittance basis or are UK resident by Non domiciled then please get in touch to book a meeting to discuss how the changes effect you.

 There are a lot of changes to tax in 2025 so follow up to keep up to date!