A list of the tax and other changes affecting small businesses in April 2025
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Posted: Fri 14th Mar 2025
In April 2025, several tax and other changes will be introduced which impact on small businesses. Here's a guide to the measures.
Increase to employer's National Insurance Contributions
In a change first announced in the government's Autumn Budget 2024, employer's National Insurance contributions (NICs) will increase by 1.2 percentage points to 15% from 6 April 2025.
In addition, the secondary threshold, the point at which employers start paying National Insurance on a worker's salary, will be cut from £9,100 a year to £5,000.
Increase in employment allowance
To reduce the impact of the National Insurance increase on smaller employers, the employment allowance, which cuts an employer's NIC bill, will increase from £5,000 to £10,500 from 6 April 2025.
In addition, the employment allowance will be no longer be restricted to smaller employers with a prior tax year secondary NIC liability of £100,000 or less.
National Minimum Wage and National Living Wage rises
From 1 April 2025, the following minimum wage increases will be introduced:
National Living Wage (21 and over): £12.21 (£0.77 and 6.7% rise)
18-20 year old rate: £10.00 (£1.40 and 16.3% rise)
16-17 year old rate: £7.55 (£1.15 and 18% rise)
Apprentice rate: £7.55 (£1.15 and 18% rise)
Accommodation offset: £10.60 (£0.67 and 6.7% rise)
Statutory parental pay increases
From 6 April 2025, statutory maternity, paternity, adoption, shared parental leave and parental bereavement pay increases from £184.30 per week to £187.18 per week.
Statutory Sick Pay increase
From 6 April 2025, Statutory Sick Pay increases to up from £116.75 per week to £118.75 per week.
Business rates relief
From 1 April 2025, the Retail, Hospitality and Leisure Business Rates Relief scheme in England, which provides relief to eligible occupied retail, hospitality, and leisure properties, will be cut from 75% to 40%, up to a cash cap limit of £110,000 per business.
In Wales, business rates relief for retail, hospitality and leisure businesses is already 40%. That will continue from 1 April 2025 for the 2025-26 tax year.
In Scotland, a 40% business rates relief will be provided to properties in the hospitality sector (including grassroots music venues with a capacity of up to 1,500) which are liable for the basic property rate (businesses with a rateable value up to £51,000). The relief is capped at £110,000 per business.
Furnished holiday lettings tax changes
Furnished holiday lettings (FHLs) are currently eligible for beneficial tax treatment including exemption from finance cost restriction rules, more beneficial capital allowances rules and access to reliefs from taxes on chargeable gains for trading business assets.
In April 2025 the system will be abolished and income and gains from a furnished holiday let will then form part of the person's UK or overseas property business and be treated in line with all other property income and gains.
The changes will take affect on 1 April 2025 for corporation tax and for corporation tax on chargeable gains, and on 6 April 2025 for income tax and for capital gains tax.
Vehicle excise duty
From 1 April 2025, electric, zero or low emission cars, vans and motorcycles will be subject to vehicle excise duty (VED). They are currently exempt.
As explained here, new zero emission cars (first registered from 1 April 2025) will pay £10 in the first year, and then begin paying the yearly standard rate from the second year of registration.
Zero emission cars first registered between March 2017 and March 2025 will pay the £195 standard rate when they renew their registration in 2025/26.
Older cars (registered between March 2001 and March 2017) will pay £20 in 2025/26 because VED for cars first registered between those dates is calculated differently. Zero emission motorcycles and light goods vehicles will start paying VED at the lowest possible rate for those vehicles.
Double cab pick ups
From 6 April 2025, double cab pick-up trucks with a payload of at least one metric tonne will be treated as cars insteads of vans for benefit-in-kind (BIK) and capital allowance purposes. This will likely increase the tax that needs to be paid by businesses using these vehicles.
HMRC describes double cab picks ups as a vehicle that has:
a front passenger cab that contains a second row of seats and is capable of seating about four passengers, plus the driver
four doors, whether the rear doors are hinged at the front or the rear (two door versions are normally accepted to be vans) and
an uncovered pickup area behind the passenger cab.
Reduction in Business Asset Disposal Relief
On 6 April 2025, the rate of capital gains tax that applies to business asset disposal relief (BADR) increases from 10% to 14%. It will increase to 18% in April 2026.
BADR, previously known as entrepreneur's relief, applies a lower capital gains tax rate when individuals make certain disposals, such as the sale of shares in trading companies or holding companies of trading groups.
Interest rates on unpaid tax liabilities
From 6 April 2025, the interest rate charged by HMRC on unpaid tax liabilities will increase by from 7% to 8.5%.
Related resources
Plan for rising employment costs: A business essential
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