Key UK Tax Changes for 2025: What Businesses and Individuals Need to Know
As of April 2025, several significant tax changes in the UK are set to take effect, impacting both individuals and businesses. Here's an overview of the key updates:
1. Reform of Non-Domiciled Taxation
Starting from 6 April 2025, the UK will replace the remittance basis of taxation with a residence-based system. This means all UK residents will be taxed on their worldwide income and gains, regardless of their domicile status. However, new arrivals who haven't been UK tax residents in the previous 10 years will benefit from a 4-year foreign income and gains relief, providing 100% relief on foreign income and gains during this period.
2. Increase in Employer National Insurance Contributions
From 6 April 2025, the Employer National Insurance rate will rise from 13.8% to 15%. Additionally, the threshold at which employers start paying this tax will decrease from £9,100 to £5,000. This change will increase employment costs for businesses.
3. Vehicle Excise Duty (VED) for Electric Vehicles
Effective 1 April 2025, zero-emission vehicles will no longer be exempt from VED:
4. Inheritance Tax on Agricultural Property
Starting April 2026, agricultural estates valued over £1 million will be subject to a 20% inheritance tax. This reform has raised concerns among farmers about the potential financial impact on family-owned farms.
5. Stamp Duty Land Tax Adjustments
On 1 April 2025, the stamp duty threshold will revert to £125,000 from the temporary £250,000. For first-time buyers, the threshold will decrease from £425,000 to £300,000. This reversion may affect property market dynamics and housing affordability.
6. VAT on Public Electric Vehicle Charging
Electric vehicle drivers using public charging points are subject to a 20% VAT rate, compared to the 5% rate for home charging. This disparity results in higher costs for those without home charging facilities. Discussions are ongoing about harmonizing these rates to promote fairness and encourage EV adoption.
Navigating these tax updates can be complex, but careful planning can help you maximise savings and stay compliant. If you need expert guidance, contact UMC Accountants for a free consultation.
1. Reform of Non-Domiciled Taxation
Starting from 6 April 2025, the UK will replace the remittance basis of taxation with a residence-based system. This means all UK residents will be taxed on their worldwide income and gains, regardless of their domicile status. However, new arrivals who haven't been UK tax residents in the previous 10 years will benefit from a 4-year foreign income and gains relief, providing 100% relief on foreign income and gains during this period.
2. Increase in Employer National Insurance Contributions
From 6 April 2025, the Employer National Insurance rate will rise from 13.8% to 15%. Additionally, the threshold at which employers start paying this tax will decrease from £9,100 to £5,000. This change will increase employment costs for businesses.
3. Vehicle Excise Duty (VED) for Electric Vehicles
Effective 1 April 2025, zero-emission vehicles will no longer be exempt from VED:
- New zero-emission cars registered on or after 1 April 2025: Subject to a first-year rate of £10, followed by the standard annual rate of £195.
- Zero-emission cars registered between 1 April 2017 and 31 March 2025: Will incur the standard rate of £195 from 1 April 2025.
4. Inheritance Tax on Agricultural Property
Starting April 2026, agricultural estates valued over £1 million will be subject to a 20% inheritance tax. This reform has raised concerns among farmers about the potential financial impact on family-owned farms.
5. Stamp Duty Land Tax Adjustments
On 1 April 2025, the stamp duty threshold will revert to £125,000 from the temporary £250,000. For first-time buyers, the threshold will decrease from £425,000 to £300,000. This reversion may affect property market dynamics and housing affordability.
6. VAT on Public Electric Vehicle Charging
Electric vehicle drivers using public charging points are subject to a 20% VAT rate, compared to the 5% rate for home charging. This disparity results in higher costs for those without home charging facilities. Discussions are ongoing about harmonizing these rates to promote fairness and encourage EV adoption.
Navigating these tax updates can be complex, but careful planning can help you maximise savings and stay compliant. If you need expert guidance, contact UMC Accountants for a free consultation.
