Some of these tax updates were confirmed in the Budget, while others are annual tax changes that vary year on year.
Stamp duty thresholds are being lowered in England and Northern Ireland, meaning more of your property will be subject to tax.(Image: Joe Giddens/PA Wire)
Eight significant tax changes are on the horizon this year, and there is no better time to get to grips with the new rules. From changes to car tax to stamp duty deadlines, these changes could have a major impact on your wallet in 2025.
Some of these tax updates were confirmed in the Budget, while others are annual tax changes that vary year on year. Here are the key pieces of information you should know when it comes to handling your finances in 2025, according to The Mirror.
National Insurance
Employers will pay more National Insurance from April 6, with the rate rising from 13.8% to 15%. The earnings threshold for when employers start paying this tax will also be lowered from £9,100 per year to £5,000. While this won’t have a direct impact on your take-home pay, businesses have warned they’ll have to raise prices for customers to mitigate costs.
Stamp duty
Stamp duty thresholds are being lowered in England and Northern Ireland, meaning more of your property will be subject to tax. Under current rules, you have to pay stamp duty if your property is your only residence and is worth over £250,000. You pay stamp duty above this threshold. This higher rate was introduced as a temporary measure in September 2022 but will go back down to its previous level of £125,000 from April. If you’re a first-time buyer, you currently only start to pay stamp duty if the property you’re buying is worth over £425,000 – but this will go back down to £300,000.
Council tax
Council tax rises every April – and 2025 will be no exception. Local authorities in England are allowed to increase bills by up to 5% – if they want to introduce larger rises, they have to hold a referendum. According to Government figures, the average band D council tax set by local authorities in England for 2024/25 was £2,171.
Car tax
New car tax rates are coming into force next April that impact anyone purchasing a new car. If you purchase a new vehicle that emits between 1-50 g/km of CO2, including hybrid vehicles, the amount you’ll pay in car tax will rise from £10 to £110. The rates for new cars emitting 51-75g/km of CO2 will increase from £30 to £130, while all other rates for cars emitting 76g/km of CO2 and above will double from their current level. For a car that emits over 255g/km of CO2, the first-year rate will double from £2,745 to £5,490. Drivers of cars in the lowest emissions category that are currently exempt from paying car tax will also start to be charged £20.
Alcohol duty
Alcohol duty rates that apply to all non-draught products – including wine, spirits and bottled beer or cider – will rise by 2.7% from February 1. However, the duty on alcohol from draught – so what is served in pubs, bars and restaurants – will be reduced by 1.7%.
Capital Gains Tax
The amount you pay in Capital Gains Tax on assets has risen from 10% to 18% for basic rate taxpayers, and from 20% to 24% for higher and additional rate taxpayers. This kicked in immediately after being confirmed during the Budget and will affect anyone who is looking to sell, give away, exchange or otherwise dispose of a capital asset next year. Capital Gains Tax is applied against the profit you’ve made, rather than how much you’ve sold the asset for.
Income Tax
Income Tax thresholds are currently frozen until 2028. This means workers get dragged into paying more tax when their wages increase – either by having to pay tax for the first time, or by moving into a higher tax bracket. There is a personal allowance of £12,570 a year before you start to pay tax. The point for when you start paying National Insurance as an employee is also frozen.
Inheritance Tax
The main Inheritance Tax threshold will remain frozen at £325,000 until 2030, as well as the additional rate you get when passing on a property, which is set at £175,000. The annual gift allowance has also been frozen at £3,000. Inheritance Tax is sometimes paid on the estate of someone who has died – this includes property, possessions and money. From April 2027, your pensions will also be included as part of your estate.