BRIEF HIGHLIGHTS OF BUDGET CHANGES:
National Insurance:
Employees:
- Main rate of Class 1 NICs to remain at previously announced rate of 8% from April 2025.
Self-Employed:
- Class 4 NICs rate will be remain at 6% from April 2025
Employers:
- Employers NICs rate to increase to 15% from April 2025.
- Employers NIC secondary threshold to reduce from £9,100 to £5,000 from April 2025.
- Employers NIC "Employment Allowance" to increase to £10,500 from April 2025.
Tax and allowances:
- Personal Income Tax and National Insurance contributions thresholds, remain fixed at their current rates until April 2028.
- National Living Wage to increase from £11.44 an hour for age 21 and over to £12.21 from 1 April 2025.
- NMW rates to apply from April 2024:
>18 to 20 year olds from £8.60 to £10.00 per hour
>16 to 17 year olds from £6.40 to £7.55 per hour;
- Dividend Allowance to remain at £500 for the 2025/26 Tax Year.
- Furnished Holiday Lettings regime will still be abolished from 6 April 2025. Going forwards profits will be taxed in the same way as any other rental property profits.
- Capital Gains Tax higher rate on residential property gains remains at 24% and 18% for the basic rate.
- Additional dwellings rate of Stamp Duty Land Tax will increase from 3% to 5% above the standard residential rates from 31 October 2024.
- Capital Gains Tax Annual Exempt Amount remains at £3,000 from April 2025.
- No change to Corporation Tax rates from 1 April 2025:
>19% for taxable profits below £50,000 (small profits rate)
>25% for taxable profits above £250,000 (main rate)
Marginal Relief available to be tapered between the small profits rate and the main rate.
- 100% Capital Allowance first year tax relief (in addition to current AIA allowances) for Limited Companies only, remains.
- Main rate of IHT remains at 40% and the nil rate band of £325,000 will be frozen until 2030. Potentially Exempt Transfers' period remains at 7 years.
- Individual's undrawn pension fund will be subject to Inheritance Tax from 6 April 2027.
- No changes to current ISA limits or taxation of savings. The new "UK ISA" will no longer go ahead.
- Van and Fuel benefit amounts increased from £3,960 to £4,020 and £757 to £769 for 2025/26.
- HMRC Double cab pick up with a payload of 1 tonne or more, tax treatment changed to be treated as Cars for Capital Allowances and Benefits in Kind from 6 April 2025 (contracts or purchases prior to 6 April 2025 no change).
- No change to the High Income Benefit Charge threshold from £60,000.
- Alcohol duties on draught products below 8.5% abv to be cut by 1.7% from 1 February 2025.
- Fuel duty rates will remain frozen for 2025/26.
- Significant changes to "Non-Dom" UK residency and Domicile regime from April 2025.
- HMRC interest rate on late paid tax will increase from April 2025 to 4% above the Bank of England Base Rate.