Here are some of the key points from the budget:
Income Tax
No changes announced, a brief reminder of current position:
- Your personal allowance remains at £12,570 and is planned to increase form 2028-29 (at the end of the freeze brough in by the previous government) the thresholds from these will rise in line with inflation.
- Basic rate threshold remains at £37,700.
- Higher rate threshold remains at £50,270.
- Additional rate threshold remains at £125,140.
- The Adjusted net income over £100,000 remains unchanged, still reducing by £1 for every £2 of income above £100,000. This means that an individual loses their personal allowance when their adjusted net income exceeds £125,140.
National Insurance (NIC)
- Class 1 (for employers) will increase from 13.8% to £15% from April 2025.
- Class 1 (for employees) will remain at 8%.
- Class 4 will will remain at 6% for income between £12,570 up to £50,270 and 2% for income above £50,270.
- Primary threshold remains at £12,570.
- Secondary threshold remains at £9,100.
- For employer the level at which they start to pay Class 1 NICs for their employees will decrease to £5,000
Employers Allowance
- Employers allowance will increase from £5,000 to £10,500
Dividends
No changes announced, a brief reminder of current position:
- The rates of taxation on dividend income will remain as follows:
– the dividend ordinary rate – 8.75%
– the dividend upper rate – 33.75%
– the dividend additional rate – 39.35%.
- As corporation tax due on directors’ overdrawn loan accounts is paid at the dividend upper rate, this will also remain at 33.75%.
- Dividend Allowance remains at £500 for 2025-26.
Capital Gains Tax
- Lower rate to increase from 10% to 18%
- Higher rate to increase from 20% to 24%
- No change to capital gains tax on residential properties to remain at 18% and 24%
Corporation Tax
No changes announced, a brief reminder of current position:
- Corporation Tax is 19% for companies with profits below £50,000.
- Corporation Tax is 25% for companies with profits over £250,000.
- Companies with profits between £50,001 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.
Capital allowances
No changes announced, a brief reminder of current position:
- Full expensing to be explored to extend to leasing or hiring when fiscal conditionals allows, otherwise remains at 100% write off on qualifying expenditure on most plant and machinery (excluding cars) as long as new and unused.
- Annual investment allowance (AIA) remains at 100% write ff for certain types of plant and machinery for incorporation and unincorporated business with a limited of £1 million.
- 100% first year allowance (FYA) for qualifying expenditure on zero-emissions cars and qualifying expenditure on plant and machinery for electric vehicle charger points have been extend to 31 March 2026 for corporation tax purpose and 5 April 2026 for income tax purpose.
- Double Cab Pick-ups – from 1 April 25 for corporation tax and 6 April 25 for income tax, a double cab pick-up will be treated as a car, the existing treatments will apply to those who purchased them before April 2025.
Business asset disposal relief and investors relief
- Increasing from 10% to 14% for disposal made on or after 6 April 2025.
- and a further Increase to 18% for disposal made on or after 6 April 2026.
- Life time for investor relief is reduced from £10 million to £1 million for qualify disposal made on or after 30 October 2024.
VAT
- VAT threshold for registration is £90,000.
- Deregistration threshold is £88,000.
- Private school fees for education and vocational training will no longer benefit from VAT exemption and will be subject to VAT at the standard rate from 1 January 2025.
National Living Wage and National Minimum Wage
The government will increase the National Living Wage (NLW) and National Minimum Wage from 1 April 2025 as follows:
- the rate for 21 year olds and over to increase from £11.44 an hour to £12.21 an hour (an increase of 6.7%, 77p);
- the rate for 18-20 year olds to increase from £8.60 an hour to £10.00 an hour (an increase of 16.3%, £1.40;
- the rate for under 18 (but above compulsory school leaving age) to increase from £6.40 an hour to £7.55 an hour and
- the apprentice rate for under 19 (and for over 19, but in the first year of their apprenticeship) to £7.55 an hour.
Benefits in kind
- Company Cars – the charge for zero emissions cars to rise from 2% to 3%, other cars will increase by 1% from 6 April 2025
- Car fuel benefit charge to be increased by CPI from 6 April 2025
- Company Vans benefit charge and fuel benefit will both increase by CPI from 6 April 2025
- Mandatory reporting of benefits in kinds via payroll software is still to be phased in from April 2026.
- Double Cab Pick-ups – from April 25 will be treated as a car, the existing treatments will apply to those who purchased them before April 2025.
Inheritance tax (IHT)
- The threshold of £325,000 is to continue to be frozen until 2030.
- Pension pots will be bought into IHT from 2027.
- From 6 April 2026 agricultural and business property will continue to benefit from the 100% Inheritance Tax relief up to a limit of £1 million. The limit is a combined limit for both agricultural and business property. Property in excess of the limit will benefit from a 50% relief
Marriage allowance
No changes announced, a brief reminder of current position:
- Transfer £1,260 of their personal allowance to their spouse or civil partner
Tax on savings income
No changes announced, a brief reminder of current allowance:
- Basic rate tax payers allowance remains at £1,000
- Higher rate tax payer allowance remains at £500
- No allowance if you are an additional rate tax payer
Individual savings accounts (ISAs)
No changes announced, a brief reminder of current limits:
- Individual saving account – £20,000
- Junior ISA – £9,000
- Lifetime ISA – £4,000 (excluding governments bonus)
- child trust fund- £9,000
High Income Child Benefit Charge (HICBC)
- The threshold at which HICBC is charge is £60,000 at a rate of 1% for every £200 above the threshold. This means that Child benefit is withdrawn in full when an individual income is £80,000 and above.
Pension
No changes announced, a brief reminder of current position:
- The annual allowance remains at £60,000.
- The money purchase annual allowance remains at £10,000.
- The tapered annual allowance remains at £260,000.
Other Business Announcements:
- ‘Non dom’ tax system will be abolished and replaced with a ‘modern, simpler and fairer’ system from April 2025
- Fuel duty remains frozen
- Business rates for retail, hospitality and leisure to receive a 40£ relief up to a cap of £110,000 per business. The small business tax multiplier will remain frozen at 49.9p and the standard multiplier will increase to 55.5p.
- Draft duty is to be cut by 1.7%.
- Stamp Duty Land Tax (SDLT) on second home surcharge rising from 3% to 5% for transactions with an effective date on or after 31 October 2024. The single rate of SDLT payable by companies and other non-natural persons purchasing a residential property worth more than £500,000 will increase form 15% to 17% from the same date.
- Making Tax Digital for Income Tax Self Assessment – Is planned to start in April 2026. The government will expand the rollout of the programme to those with incomes over £20,000 by the end of this Parliament and will set out the precise timing for this at a future fiscal event.
This is meant as guidance only and applies to England, Scotland and Wales have the right to vary the rates. No responsibility for loss occurred by any persons acting/refraining from action as a result of this information can be accepted by the Nicholson & Co (Sheffield) Ltd. It is always advisable to seek advice first.