The tax landscape is shifting for business owners in 2025. The government’s sweeping reforms to tax in the Autumn Budget will come into effect throughout the year.
But when do these new rules start? And what changes will affect small businesses most? Read on for more.
Labour’s tax plans for businesses in 2025
1. A rise in employers’ National Insurance
From April 2025, there will be a National Insurance increase and a reduction to the threshold at which employers start paying it.
The rate at which employers will pay National Insurance is increasing from 13.8 per cent to 15 per cent. And the secondary threshold is being reduced from £9,100 a year to £5,000 a year (which works out to £417 a month or £96 a week).
In the Autumn Budget, Chancellor Rachel Reeves announced reforms to National Insurance to raise £25 billion for public finances.
And with the government ruling out rises in employee National Insurance, VAT, and income tax for working people – employers’ National Insurance was chosen to raise funds.
So if you employ staff, the amount you pay in National Insurance for each employee will increase from April 2025. The employment allowance will also rise from £5,000 to £10,500.
| 2024-25 | 2025-26 | |
| National Insurance rate | 13.8% | 15% |
| Annual threshold | £9,100 | £5,000 |
| Monthly threshold | £758 | £417 |
| Weekly threshold | £175 | £96 |
2. Changes to business rates
Retail, hospitality, and leisure businesses will continue to receive business rates relief for the next year.
But the amount of the relief these businesses receive is dropping from 75 per cent to 40 per cent, and is capped at £110,000 for each business.
And more broadly, business rates are now based on a new rateable value. It’ll now be based on market conditions from 1st April 2021 to account for changes in property value since 2017.
And as a part of the Autumn Budget 2024, it was announced the small business multiplier will remain at 49.9p for 2025-26, while the standard multiplier will increase to 55.5p.
3. A reduction in capital gains tax allowance
Changes to business asset disposal relief, which reduces the capital gains tax (CGT) rate on qualifying business disposals, are being phased in this year.
From 6 April 2025, it’s increasing to 14 per cent – and increasing again to 18 per cent for disposals made on or after 6 April 2026.
This follows the changes to CGT rates for most assets that came into effect on 30 October 2024, when the lower rate increased from 10 per cent to 18 per cent and the higher rate went from 20 per cent to 24 per cent.
4. An increase in Vehicle Excise Duty
Vehicle Excise Duty (commonly known as road tax) rates will increase for every type of vehicle from April 2025.
It’s expected the standard rate of road tax will rise by just £10 (to £165). And for vehicles registered after 1 April 2017, the effects will be minimal.
But for older vehicles with higher emissions, costs will go up more. From April 2025, the first-year tax for cars emitting over 76g/km of CO2 will double compared to the current rate.
Even if you don’t drive for work, this could have a knock on effect on fulfilment costs and your everyday expenses. Our guide to new driving laws goes into more detail on the changes in road tax for electric vehicles.
5. Non-dom status abolished
Non-domicile (often called non-dom) status is being abolished from April 2025, to be replaced with residence-based rules. This means non-doms will be taxed on their worldwide income and gains, regardless of whether they bring the money into the UK.
From April, there’ll be a Temporary Repatriation Facility. A three-year scheme to help ex non-doms bring their assets to the UK at a discounted tax rate.
But the Chancellor recently announced plans to make this transitional period more generous to non-doms. A Treasury spokesperson said it did not change the government’s aim of “replacing the outdated non-dom tax regime” with something fairer.
More useful guides for business owners
- What is public liability insurance?
- How to do a self assessment tax return
- How much is VAT?
- When is corporation tax due?
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