Employer NIC Rate Rise to 15% & Secondary Threshold Cut to £5,000
From April 2025, employer National Insurance contributions increase from 13.8% to 15%. The secondary threshold — the point at which employers begin paying NIC — falls from £9,100 to £5,000 per year. Employment Allowance increases to £10,500 to partially offset the impact on smaller employers.
Capital Gains Tax Rates Increased
The basic rate of CGT on most assets increases from 10% to 18% and the higher rate from 20% to 24%, effective from 30 October 2024. Residential property rates remain at 18% and 24% (no change). Business Asset Disposal Relief (BADR) rate rises to 14% from April 2025 and 18% from April 2026.
Making Tax Digital for Income Tax — Phase 1 Goes Live
From 6 April 2026, sole traders and landlords with gross income over £50,000 must keep digital records and submit quarterly updates to HMRC via MTD-compatible software. Those earning over £30,000 follow from April 2027. Paper Self Assessment returns will no longer be an option for these taxpayers.
Merged R&D Relief Scheme — Now in Full Effect
The merged R&D scheme (combining the old SME and RDEC schemes) applies to all accounting periods beginning on or after 1 April 2024. The headline rate is 20% above-the-line credit. R&D-intensive SMEs (qualifying expenditure ≥ 30% of total costs) retain an enhanced 27% credit. Overseas subcontracting restrictions now fully apply.
HMRC Consultation: PAYE Real Time Reporting Enhancements
HMRC has opened a consultation on requiring employers to report pay information in real time more granularly — including hours worked, contractual pay rates and variable pay elements. Responses due by 30 June 2025. If enacted, changes could take effect from April 2027.
FRS 102 Revised Edition — Effective for Periods Beginning 1 Jan 2026
The FRC's revised FRS 102 introduces lease accounting requirements aligned with IFRS 16, new revenue recognition guidance, and changes to financial instrument classification. Early adoption is permitted. Companies should begin assessing impact on balance sheets and covenants now.
Inheritance Tax on Pension Pots — Proposed from April 2027
The government has confirmed plans to bring unused pension funds and death benefits within the scope of IHT from April 2027. Currently pensions are passed on free of IHT, making them a popular estate planning vehicle. A technical consultation on the mechanism closed in January 2025; final legislation is expected in Finance Bill 2026.
Updated IR35 Compliance Guidance for Umbrella Companies
HMRC published updated guidance clarifying responsibility for off-payroll working compliance in umbrella company supply chains. End-clients must now take reasonable steps to verify umbrella company compliance. New due diligence checklists have been released to help hirers assess risk.