True lifelong financial planning for the serious business of life.
True lifelong financial planning
for the serious business of life.
True lifelong financial planning for the serious business of life.
True lifelong financial planning
for the serious business of life.
Category: Financial Planning
The start of a new tax year is the ideal time to review your personal and business finances, ensuring you’ve maximised your tax-efficient savings, investments, and reliefs.
While many allowances simply reset, last year, chancellor Rachel Reeves introduced several significant changes to taxes and reliefs for businesses in the Autumn Budget. Some of these changes have already been implemented, while others will take effect from 6 April.
In addition to the reforms, there are also several increases to minimum and statutory payments scheduled for April.
Reeves estimated that the Budget would raise an additional £40 billion, with much of the financial burden falling on businesses.
While it’s likely that your business will face higher taxes under the upcoming changes, working with a financial planner can help minimise the impact.
Read on to discover four key changes coming in the new tax year that could affect your business.
The headline announcement in the Autumn Budget was the decision to raise the rate of employer National Insurance contributions (NICs) from 13.8% to 15%. On top of this, Reeves also announced a reduction in the earnings threshold at which employers start paying NICs (the “secondary threshold”) from £9,100 to £5,000.
The UK government estimates that these changes will generate between £23.8 billion and £25.7 billion annually.
To help smaller businesses manage some of these costs, the annual Employment Allowance – which provides NICs relief – will increase from £5,000 to £10,500.
Furthermore, the £100,000 threshold for total employer NICs, which previously prevented larger businesses from claiming the allowance, will be abolished. This means more businesses, including those with higher NICs liabilities, will now qualify for the Employment Allowance.
Despite these relief measures, the rise in NICs could still affect your business’s net income. This means that now might be a good time to explore salary sacrifice options to help reduce your employee wage bill.
A financial planner can work with you to assess the cost of the new NICs and evaluate salary sacrifice strategies, such as pension contributions, to find the best approach for your company and employees.
Capital Gains Tax (CGT) rates for non-property holdings increased on 30 October 2024, with the basic rate rising from 10% to 18% and the higher rate from 20% to 24%.
However, Business Asset Disposal Relief (BADR), which provides a lower CGT rate when selling or disposing of a business or its assets, is set to increase from 10% to 14% on 6 April, with a further rise to 18% scheduled for 2026.
Additionally, the lifetime limit for Investors’ Relief – which reduces CGT on the sale of shares in unlisted companies – was reduced from £10 million to £1 million in October. The Investors’ Relief rate will increase in line with BADR.
So, with CGT rates already higher and relief rates set to change, you could end up paying significantly more tax on the sale of your business or assets.
A financial planner can help you to time and structure any business or asset sales to maximise tax efficiency, helping ensure you keep more of your proceeds.
Starting 6 April, the National Living Wage (NLW) for workers aged 21 and over will increase from £11.44 to £12.21 an hour. For a full-time employee on the NLW, this increase will amount to an annual pay rise of £1,400.
Other payment increases include:
These wage increases, combined with changes to NICs, could significantly raise your overall business costs, especially when considered alongside the employer NICs reforms.
Again, exploring salary sacrifice options with a financial planner can help reduce your wage bill while ensuring your employees continue to enjoy valuable benefits.
Starting in April 2025, several significant changes will affect businesses, including adjustments to business rates relief.
Since 2020, retail properties have benefited from a 75% business rates discount, capped at £110,000. However, this relief is set to expire in April 2025.
While Reeves introduced a 40% business rates relief for the retail, hospitality, and leisure sectors for 2025/26, the reduction from 75% to 40% will result in many businesses facing nearly double the rates they currently pay.
Additional business tax updates include:
Analysing how these changes could affect your business can be challenging, but a financial planner can work with you to assess the implications and develop strategies to manage costs effectively.
The upcoming changes are set to hit many businesses with a higher tax bill. A financial planner can help ensure your business stays resilient by identifying strategies to strengthen your financial position.
By taking a proactive approach, you can protect your business’ financial health and set it up for long-term success.
Email [email protected] or call us on 01625 466360.
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
If you’d like more information about this article, or any other aspect of our true lifelong financial planning, we’d be happy to hear from you. Please call +44 (0)1625 466 360 or email [email protected].
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