As of April 2025, a wide range of tax increases and regulatory changes took effect across the UK, impacting businesses, property owners, and individuals. These changes brought rising costs, reduced tax reliefs, and significant shifts in how various assets and activities are taxed.
Here’s a summary of what changed, how it affected different sectors, and what business owners needed to consider.
Employer Costs Increased: National Insurance & Minimum Wage
From 6 April 2025, employers saw their National Insurance contributions rise from 13.8% to 15%. The threshold for employer NICs also dropped from £9,100 to £5,000, bringing more low-paid and part-time workers into the system.
In addition, from 1 April, the National Minimum Wage increased by 6.7%, adding further to payroll costs across all industries.
Impact:
- Employers with lower-paid staff experienced higher payroll liabilities.
- Many businesses reviewed hiring plans, workforce structure, or introduced cost-saving efficiencies.
Business Rates Rose Sharply
From 1 April 2025, the expiry of various business rates reliefs led to sharp increases in property tax bills:
- Hospitality and leisure businesses saw average bills rise from £3,751 to £9,003 per year.
- Pubs were hit hardest, with increases of up to £19,000 annually.
- Private schools lost their charitable relief, compounding earlier VAT changes on school fees.
Impact:
- Many businesses in retail, hospitality and leisure faced significant pressure on operating margins.
- Some schools and smaller operators had to restructure or review their future viability.
Capital Gains Tax (CGT) and Reliefs Increased
From 6th April 2025, the rates for Business Asset Disposal Relief (BADR) and investors’ Relief rose from 10% to 14%. Then, from 30th October 2025, the main Capital Gains Tax rate increased from 20% to 24%.
Impact:
- Exiting or selling businesses became more expensive for entrepreneurs and investors.
- Those who sold before April benefitted from lower rates, while others revisited their long-term exit strategies.
Double Cab Pickups Were Reclassified as Cars
As of April 2025, double cab pickups were no longer treated as commercial vehicles for tax purposes. They became subject to the same tax treatment as cars, leading to:
- Higher Benefit in Kind (BIK) tax for employees.
- Limited ability to reclaim VAT.
- Increases in road tax and operating costs.
Impact:
- Businesses that relied on pickups, especially in construction and trades, faced higher tax bills and reassessed fleet purchases.
Furnished Holiday Let Tax Benefits Were Abolished
From April 2025, the furnished holiday let (FHL) regime was scrapped, removing key tax advantages such as:
- Mortgage interest relief.
- Capital allowances.
- Favourable CGT treatment.
Impact:
- Many landlords opted to sell or switch to long-term lettings.
- Coastal and tourist-dependent areas braced for reduced holiday accommodation supply.
Stamp Duty Thresholds Were Reduced
New Stamp Duty Land Tax (SDLT) thresholds came into effect in April.
- The first-time buyer exemption dropped from £425,000 to £300,000.
- Home movers now paid SDLT on purchases over £125,000, rather than £250,000.
Impact:
- The cost of buying a home increased for many, particularly first-time buyers.
- Some rushed to complete purchases before April to avoid the higher rates.
VAT and Rate Relief Were Removed from Private Schools
Private schools lost their charitable rate relief in April, following the introduction of VAT on school fees from January 2025.
Impact:
- Parents faced higher education costs.
- Smaller independent schools began exploring mergers or closures to remain viable.
Vehicle Excise Duty (VED) Doubled for Petrol & Diesel Cars
New rates introduced in April saw VED double for all new petrol and diesel models.
- High-emission models saw annual charges rise up to £5,490.
Impact:
- Many individuals and businesses accelerated plans to switch to electric vehicles.
- Fleets were reassessed to manage ongoing costs.
Council Tax Rose Across England
From April, local authorities in England were allowed to raise council tax by up to 5%.
- Around 90% of councils applied the full increase, pushing up household bills once again.
Impact:
- Households and renters faced additional financial pressure.
- Landlords factored the rises into rental reviews.
What This Means for Businesses and Individuals
These changes significantly increase the cost of employing staff, running premises, and operating vehicles, while also reducing tax reliefs for investors, landlords, and education providers.
For many, the first quarter of 2025 was a critical window to act. Those who planned early were better positioned to minimise the financial impact. If these changes are now affecting your business or personal finances and you need support going forward, contact us, we’re here to help.
