The new tax year is now right around the corner, with the 2025/26 tax year starting on 6th April 2025. With that in mind, let’s have a quick rundown of the changes we will be seeing from Sunday onwards with the new tax year…
National Insurance Changes
On 6th April 2025, the rate of employers’ National Insurance contributions (NICs) will increase from 13.8% to 15%. The threshold for when employers start to pay this will now be £5,000 a year (down from £9,100). This is known as the Secondary Threshold, and this new amount of £5,000 will be in effect until 5th April 2028, before increasing in line with Consumer Prices Index (CPI).
Employment Allowance aims to help small businesses reduce their NI tax burden, allowing employers which are eligible to claim to reduce their annual NI liability. From 6th April, the maximum Employment Allowance will increase from £5,000 to £10,500. Additionally, the current £100,000 threshold for eligibility will be removed, meaning all eligible employers with employer NICs will be able to claim.
The Small Profits Threshold is increasing to £6,845 (up from, £6,725) for the 2025/26 tax year, and the rate will increase by 1.7%. The Lower Earnings Limit will also increase by 1.7% from 6th April 2025, and the threshold will be £6,500 per year (up from £6,395).
State Pensions
Both the basic and new State Pension will increase by 4.1% due to the Triple Lock guarantee.
The Triple Lock means that the State Pension increases every tax year by whichever of the following is highest:
- A 2.5% increase
- In line with inflation, as measured by the Consumer Prices Index in the September of the previous year
- Average earnings across the UK
The 4.1% increase is in line with earnings growth, which was the highest of these figures.
Inheritance Tax (IHT)
The IHT liability for non-UK domiciled individuals is currently based on their domicile status on a remittance basis (where you only pay UK tax on any income or gains you bring to the UK). From 6th April 2025, the UK will move to a residence-based system where individuals who have been a UK resident in 10 out of the last 20 tax years will be charged IHT. You can find out more about these changes here.
The changes affecting levels of Agricultural Property Relief will not be in place until 6th April 2026 (the start of the 2026/27 tax year). You can find out more about this here.
Parental Leave and Pay
Statutory Parental Pay is set to increase in the new tax year, rising to either £187.18 per week (up from, £184.03) or 90% of the employee’s average weekly earnings, whichever is lower.
Additionally, the Neonatal Care (Leave and Pay) Act 2023 will come into effect on 6th April. Neonatal Care Leave will apply to parents of babies who are admitted into neonatal care up to 28 days old who have a continuous hospital stay of 7 days or longer. Eligible parents will be able to take up to 12 weeks of leave (and pay, if eligible) in addition to any other leave entitlements, such as maternity and paternity leave. You can read the Act in full here.
Statutory Sick Pay
Statutory Sick Pay will increase to £118.75 per week (up from £116.75) from 6th April 2025. Additionally, the government has announced that we will see changes to Statutory Sick Pay which you can read more about here. It is expected that these changes will come into effect next year.
Capital Gains Tax
For disposals made on or after 6th April 2025, gains that are eligible for Business Asset Disposal relief will be taxed at 14% (going up to 18% from 6th April 2026). This is an increase from the current rate of 10%.
Please also note that Minimum Wage has increased as of 1st April 2025. You can read more about this on our blog about the Autumn Budget.