Spring Statement 2025
Making Tax Digital (MTD)for Income Tax
At present MTD for income tax is scheduled to commence from 6 April 2026 for sole trader businesses and landlords earning over £50,000 and 6 April 2027 for those earning above £30,000. It has now been announced that those earning above £20,000 will be included from April 2028.
Autumn Statement 2024
Personal Taxation
Personal Allowances
The personal allowance and basic rate limit will be maintained at the 2021/22 level up to and including 2025/26. It will set the personal allowance at £12,570 and the basic rate limit at £37,700 for tax years:
The higher rate threshold (the personal allowance added to the basic rate limit) will be £50,270 for 2025/26.
The National Insurance contributions Upper Earnings Limit and Upper Profits Limit will remain aligned to the higher rate threshold at £50,270 for these years. From 2026 to 2027 onwards, existing legislation means the default is for the Personal Allowance and basic rate limit to be indexed with Consumer Price Index (CPI).
Business Taxes
Corporation Tax
From 1 April 2023, the Corporation Tax main rate for non-ring fenced profits increased to 25% applying to profits over £250,000. A small profits rate (SPR) was also introduced for companies with profits of £50,000 or less so that they will continue to pay Corporation Tax at 19%. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective Corporation Tax rate.
The marginal rate equates to 26.5% on profits exceeding £50,000 up to £250,000 when it drops to 25%.
Capital Allowances
Current capital allowance rates are as follows:
| Type | 2023-24 to 2025-26 |
| Writing-down allowance (WDA): general pool | 18% |
| WDA special rate pool: including Integral features and Long life assets | 6% |
| Small pool WDA where pool is £1,000 or less | 100% |
| First Year Allowance (FYA): Electric car charging points | 100% |
VAT
VAT taxable turnover threshold for registration will remain at £90,000.
Deregistration threshold to remain at £88,000.
All businesses registered for VAT are still required to file returns using Making Tax Digital (MTD) software.
Benefit changes
From 6 April 2025 double cab pickups will no longer be treated as vans by HMRC and Customs & Excise. Instead they will be reclassified as cars. This will have a significant effect both on the benefit arising and VAT no longer being recoverable.
From April 2025, the BIK tax rate for electric vehicles (EVs) will rise as part of the government’s phased approach to increasing tax on low-emission company cars. There will be a year-on-year increase on the percentage you pay BIK on, which will increase until tax year 2029/2030. You can find information regarding the increases on the HMRC’s website.
Changes to Basis Periods
For sole traders and partnerships the changes previously detailed have now taken place and most of our clients will have now amended their year ends to either 5 April or 31 March.
Capital Taxes
Inheritance Tax
The IHT thresholds are frozen at their 2020 to 2021 levels up to and including 2025 to 2026. This measure will: maintain the Nil rate band at £325,000; maintain the Residence nil rate band at £175,000; and, maintain the Residence nil rate band taper, starting at £2 million.
If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £500,000. Please see HMRC website or contact us for more details.”
Capital Gains Tax
The CGT annual exemption for 2024/25 is £3,000 per person. Gains within this amount do not incur CGT. The exemption is expected to remain at the same level for the 2025/26 tax year. This exemption is separate from and in addition to the personal allowance for income tax purposes. The Capital gains tax rates changed on 30 October 2024.
If you’re a basic rate taxpayer, the rate you pay depends on the size of your gain, your taxable income and whether your gain is from residential property or other assets.
If you’re a higher or additional rate taxpayer, the amount you pay will depend on the date and type of your gain.
Gains from 30 October 2024 onwards
You’ll pay:
- 24% on your gains from residential property
- 28% on your gains from ’carried interest’ if you manage an investment fund
- 24% on your gains from other chargeable assets
Gains between 6 April 2024 to 29 October 2024
You’ll pay:
- 24% on your gains from residential property
- 28% on your gains from ‘carried interest’ if you manage an investment fund
- 20% on your gains from other chargeable assets
Residential property
You do not usually incur capital gains tax when you sell your home. See above for applicable rates.
If you sold a property in the UK on or after 6 April 2020
You must report and pay any Capital Gains Tax due (CGT) on UK residential property within:
- 60 days of selling the property if the completion date was on or after 27 October 2021
- 30 days of selling the property if the completion date was between 6 April 2020 and 26 October 2021
Please contact us immediately if you sell a residential property that may be subject to CGT.
National Insurance
From 6th April 2025:
Employment allowance increases from £5000 to £10,500 per annum.
The £100,000 eligibility threshold for the Employment Allowance will be removed, meaning more businesses, regardless of size, can claim the allowance.
The lower earnings limit £125 per week (£542 per month, £6,500 per year).
Primary threshold is set at £242 per week (£1,048 per month, £12,570 per year), while the secondary threshold is set at £96 per week (£417 per month, £5,000 per year).
Other NI rates are available on the HMRC website
National Minimum Wage and National Living Wage rates
The table below gives the current rates from 1 April 2025.
| 21 and over | 18 to 20 | Under 18 | Apprentice | |
| April 2025 | £12.21 | £10.00 | £7.55 | £7.55 |
Construction Industry & VAT
A reverse charge affects supplies of building and construction services subject to the CIS scheme involving labour, or materials and labour, at the standard or reduced VAT rates.
If a contractor receives a service subject to the VAT reverse charge from it’s subcontractor, it must account for the VAT in box 1 of it’s VAT return and also recover it simultaneously on the same return in box 4, subject to the normal rules for input tax deduction. The subcontractor will no longer be required to charge VAT but will in future inform the contractor of the amount of the VAT reverse charge applicable. The subcontractor will also inform the contractor that the invoice is subject to the reverse charge and that the contractor is required to account for the VAT. The final contractor in the chain will be required to account for and pay VAT on their service.
If you are affected by the reverse charge scheme you will need to keep separate records. We have prepared pro forma spreadsheets to assist you if required. Please contact us if you wish to take advantage of these or if you require further details on your future responsibilities.
Please follow the links below for the HMRC flowcharts showing the steps to be taken by both suppliers and buyers
Making Tax Digital for VAT
All VAT registered businesses now need to keep their records digitally, using Making Tax Digital (MTD) functional compatible software, and create the VAT return from that (or a combination of) software.
Main Changes
Digital records must be maintained in what is defined as “functional compatible software” i.e. software or spreadsheets (or combination of both), which will connect to HMRC via an Application Programming Interface (API). These records must be digitally maintained for 6 years.
Submission of VAT Returns under MTD
We have obtained VAT filing software that enables us to file VAT returns online. If you are unable to file using an API, we will be able to do so on your behalf, should you wish to use this service.