Changes from 6th April 2025

As we approach the start of a new tax year, there are several changes coming into play that you may not be aware of. In this article we breakdown the main changes.

Changes in Employers National Insurance Contributions/Employment Allowance

If you’re an employer with a National Insurance Contributions (NICs) liability, or with employees with earnings of at least £5,000 a year, this will impact you.

This measure decreases the NICs Secondary Threshold, the earnings after which an employer becomes liable to pay secondary Class 1 NICs on a given employment. The Secondary Threshold is currently set at £9,100 a year, and will be reduced to £5,000 a year.

The Secondary Threshold of £5,000 a year will be in effect from 6 April 2025 until 5 April 2028. Thereafter the Secondary Threshold will be increased in line with Consumer Prices Index (CPI). This does not impact other employer NICs thresholds such as the Apprentice Upper Secondary Threshold or the Upper Secondary Threshold for employees under 21.

This measure also:

• increases the secondary Class 1 NICs rate from 13.8% to 15%
• increases the maximum Employment Allowance from £5,000 to £10,500
• removes the restriction that currently applies to the Employment Allowance where employers who have incurred a secondary Class 1 NICs liability of more than £100,000 in the tax year immediately prior to the year of the claim are unable to claim it — this means all eligible businesses and charities will be able to claim a greater reduction on their secondary Class 1 NICs liability, irrespective of what their secondary Class 1 NICs liabilities were in the tax year prior to the year of the claim
• means if you do have a higher employer NIC liability, this is a cost to the company and so would reduce the amount of corporation tax due.

Increases to the National Minimum Wage & National Living Wage

In April the National Minimum Wage will be increasing as follows:

• Apprentice – £7.55 per hour
• Under 18 – £7.55 per hour
• 18 to 20 years old – £10.00 per hour

As for the National Living Wage, this will be increasing to:

• 21 years and above – £12.21 per hour

To find out more, and to understand the differences, check out our dedicated blog here.

Business Asset Disposal Relief Rates

In the Autumn Budget, the Chancellor announced an increase in the Capital Gains Tax (CGT) rate on the disposal of assets qualifying for Business Assets Disposal Relief (BADR) from the current 10% rate to 14% from April 2025. The rate will increase further to 18% in April 2026. This compares to the CGT rate of 24% for higher rate taxpayers.

If you are selling your business, you must satisfy the following conditions for the two years ending with the date of sale:

1. You must own a trading business as a sole trader or business partner (so ownership of investment assets – e.g., property assets – will not qualify); and
2. You must have owned the business for at least two years.

Alternatively, if you are selling shares or securities, for the two years prior to the sale, you must meet these requirements:

• You are an employee or office holder of the company; and
• the company’s main activities are trading (rather than investment), or it is the holding company of a trading group.

You can find out more information here.

Furnished Holiday Let’s abolished

The Chancellor has also announced that the favourable tax treatment furnished holiday lettings (FHLs) currently benefit from will be abolished with effect from 6 April 2025.

Currently, FHLs benefit from a range of beneficial tax rules including:

• The full amount of finance costs (i.e. mortgage interest) can be deducted from FHL income;
• On disposal of an FHL, business asset disposal relief may be available which results in a 10% capital gains tax rate applying;
• Profits from FHLs count as relevant earnings for pension purposes meaning tax-advantaged pension contributions can be made;
• Where the accruals basis applies, capital allowances on items such as furniture and fixtures and fittings can be claimed against the rental income; and
• Where the cash basis applies, expenditure on furniture etc. is generally deductible as an expense of the property business.

Changes to Company Turnover Thresholds

The UK government has announced plans to increase the financial thresholds that determine company sizes, which in turn affect statutory auditing requirements. This is significant, as these thresholds determine whether a company requires statutory auditing.

The proposed new turnover thresholds are:

• Micro-entities: Turnover threshold up from £632,000 to £1 million.
• Small companies: Turnover threshold up from £10.2 million to £15 million.
• Medium-sized companies: Turnover threshold up from £36 million to £54 million.

These changes are intended to reduce the reporting burden on businesses by allowing more companies to qualify for simplified reporting regimes.

New Audit Thresholds

Meanwhile, the government has also announced plans to increase the financial thresholds that determine company sizes, which in turn affect statutory audit requirements. A company may be exempt from having to arrange a statutory audit if it meets at least two out of three of these criteria:

• Annual turnover of no more than £15 million. Increased from £10.2 million.
• Total assets of no more than £7.5 million. Increased from £5.1 million.
• 50 or fewer employees. Unchanged.

These changes mean that fewer companies will have to arrange an audit – as the annual turnover and asset requirements have increased significantly. The key takeaway is that if your turnover is between £10.2 million and £15 million and you had to arrange audits in the past, you will now probably be exempt. These changes are expected to exempt around 132,000 businesses from statutory auditing.

Please note, although audit limits are changing, you may still need an audit if it is a third-party requirement – such as if a bank requirement, requested by shareholders, your articles of association mandate it, etc.

In short, the new audit thresholds could bring significant changes, reducing the statutory audit requirements for many businesses. While this offers some welcome relief in terms of reporting obligations, it’s vital not to overlook the value of maintaining robust financial practices.

Companies House Changes

Companies House will be introducing a new identity verification process to help deter those wishing to use companies for illegal purposes. Anyone setting up, running, owning or controlling a company in the UK will need to verify their identity to prove they are who they claim to be.

From 25 March 2025, you’ll be able to voluntarily verify your identity. You’ll be able to verify directly with Companies House through GOV.UK One Login, or through an Authorised Corporate Service Provider (ACSP) – this last option isn’t available quite yet, but keep an eye out…

In the future, identity verification will become compulsory for:

• new directors and people with significant control (PSCs)
• existing directors and PSCs
• anyone acting on behalf of a company

Identity verification will also apply to other registration types. For example, any members of a limited liability partnership (LLP) will also need to verify their identity.

In addition to these changes in respect of verification of identity, the Economic Crime and Corporate Transparency Act has also introduced measures to prevent abuse of personal information held on the Companies House register.

One of the aims is to balance the need for corporate transparency with the understanding that personal information should only be published when it’s necessary and proportionate to do so.

Since 27 January 2025, individuals have been able to apply to suppress the following information from historical documents:

• registered office address where it’s their home address

From spring/summer 2025, you’ll will be able to apply to suppress the following information from historical documents:

• residential addresses in most instances when shown elsewhere on the register
• day of birth for documents registered before 10 October 2015 (only the month and year of birth have been publicly displayed since 10 October 2015)
• signatures
• business occupation