National Minimum Wage
The NMW is increasing from April 2025.
The rates which will apply from 1st April 2025, are as follows:
| NMW Rate | Increase (£) | Percentage Increase | |
| National Living Wage (21 and over) | £12.21 | £0.77 | 6.1 |
| 18-20 Year Old Rate | £10.00 | £1.40 | 16.3 |
| 16-17 Year Old Rate | £7.55 | £1.15 | 18.0 |
| Apprentice Rate | £7.55 | £1.15 | 18.0 |
No increases on VAT, Income Tax, and National Insurance for Employees
The budget does not include increases to VAT, Income Tax, or National Insurance for employees, with the Chancellor pledging to keep these rates steady, offering stability for workers. This aims to protect disposable incomes at a time when household budgets remain tight.
Employers National Insurance
Employers NI is increasing to 15% from 13.8%, in April 2025, as well as the earnings limit reducing to £5,000 from £9,100, meaning more staff become liable for NI payments.
The Government expects these changes to raise estimated revenue of £23.8bn in 2025/26 alone from businesses to help fund increased spending on public services and the minimum wage increase. This is a significant cost for employers, especially SMEs, costing each employer £615 upwards per year, per full-time employee.
For us, we believe this is the biggest cash-flow tax burden on small businesses, so it’s really important that you understand how this affects you from April 2025, and consider these increased costs in your forecasts.
Through very quick initial calculations and examples, it looks like Employers National Insurance and Minimum Wage changes will impact a 25 employee small business by over £52,000 per year in extra costs.
Employment Allowance
To partially offset the rising cost of NI contributions, The Employment Allowance will be increasing from £5,000 to £10,500 from April 2025. This measure aims to provide relief, especially for small businesses, by allowing them to reduce their National Insurance bill. However, the increase may not fully cover the impact of National Insurance rates on employers, especially those with larger payrolls. Our calculations show this will have the biggest impact for micro-employers (less than 5 employees).
Those employers already claiming this won’t need to do anything and new employers will be able to implement with minimal admin at the start of the tax year.
Capital Gains Tax
Capital Gains Tax will rise, with a lower rate increasing from 10% to 18%, and higher rate from 20% to 24%. This change may impact high-earning individuals, investors, and landlords.
The lower and higher rates of CGT will be increased immediately (as of 30th October 2024).
The rise on CGT is expected to impact 264,000 people in 2025/26, and raise £1.4bn for The Treasury.
It comes on top of the slashing of the tax-free allowance over the past couple of years, from £12,300 a year in 2022/23 to just £3,000 in the current tax year. Investors also have to cope with the fact that frozen income tax thresholds have pushed more people into higher tax rate – automatically pushing up their capital gains tax rate.
Business Asset Disposal Relief
The Government are maintaining a lifetime limit for Business Asset Disposal Relief at £1,000,000.
However, the rate will increase to 14% in 2025/2026 and then to 18% in 2026/2027.
Electric Vehicle Tax
Electric Vehicle tax reliefs will remain until April 2028, encouraging businesses and individuals to continue transitioning to electric vehicles as the UK works towards its Net Zero goals.
Corporation Tax
Corporation Tax will remain at the current rate.
Inheritance Tax
There is a commitment to extend the Inheritance Tax threshold freeze for a further two years, to 2030.
In sweeping changes to Inheritance Tax, the Chancellor confirmed reforms to business and agricultural property relief with reduced 20% IHT rate.
The new rules will come into effect from 6th April 2026 and will significantly change the current regime, raising an estimated £1.6bn over the parliament.
Pension pots will be brought into IHT (Inheritance Tax) for the first time, removing some very favourable tax planning options from 2027.
Chancellor Rachel Reeves confirmed at the Budget that pensions would come under the tax to ‘make the inheritance tax system fairer’.
This will remove the opportunity for individuals to use pensions as a vehicle for inheritance tax planning by bringing unspent pension pots and death benefits payable into the scope of inheritance tax from 6 April 2027, which will affect around 8% of estates each year.
Stamp Duty Land Tax
Stamp Duty Land Tax for second homes is increasing by 2% from tomorrow (Thursday 31st October 2024). This is part of the Governments broader efforts to make housing more affordable and accessible by discouraging second-home purchases.
Income Tax and National Insurance thresholds
There will be be no extension of the freeze in Income Tax and National Insurance thresholds beyond the decisions of the previous government. From 2028-2029, however, Personal Tax thresholds will be updated in line with inflation.
Business Rates
The current 75% discount to business rates – due to expire in April 2025 – will be replaced by a discount of 40%, up to a maximum discount of £110,000.
While this is a significant discount, the shift may be challenging for retailers and other sectors relying on physical locations, with business rates nearly doubling (rather than quadrupling).
Dividends
No changes announced to the rate of tax on dividends.
Fuel Duty
Fuel duty has been frozen yet again, extending the temporary 5p cut for one year, at a cost of £3bn next year.
Fuel has been frozen for 15 years, but despite the freezes it raises a colossal amount of tax with an annual boost to the Treasury of nearly £25bn.
Higher HMRC interest rates on overdue tax
As part of measures to clamp down on bad payers, the Chancellor said that HMRC will have the power to hike up even further the rates of interest they charge
The current HMRC rate on late payment is 7.5%, which is 2.5% over the bank rate. Under new proposals this will rise to 4% over base rate from 6 April 2025.
The move is designed to force recalcitrant taxpayers to actually pay their overdue tax bills in a timely manner rather than avoiding payment.
The plan will see HMRC interest rates imposed at an even higher rate than currently charged. With base rates currently at 5%, HMRC charges its own interest rates which are hiked in line with the Bank of England.
We will update this page as further guidance is released. Stay tuned for more insights.
If you have any questions, give us a call on 01872 267 267, or email us at contact@whyfield.co.uk.