Eight significant tax changes are on the horizon for 2025 and beyond, which could considerably impact your finances. From alterations to car tax to an impending stamp duty deadline, we’ve got all the details you need to know.
Some of these tax updates were confirmed in the Budget, while others are annual tax changes that increase your bills. .
Employers’ National Insurance will see a rise from April 6, with the rate increasing from 13.8% to 15%. The earnings threshold for when employers start paying this tax will also be reduced from £9,100 per year to £5,000.
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While this won’t directly affect your take-home pay, businesses have warned they’ll have to raise prices for customers to offset costs.
Stamp duty thresholds in England and Northern Ireland are set to decrease, meaning more of your property will be subject to tax. Under current rules, if your property is your only residence and is worth over £250,000, you have to pay stamp duty above this threshold, reports the Mirror.
This higher rate was introduced as a temporary measure in September 2022 but will revert to its previous level of £125,000 from April. For first-time buyers, the current stamp duty threshold is £425,000 – but this will decrease to £300,000.
Council tax.
Council tax is set to rise again in April 2025, with local authorities in England permitted to increase bills by up to 5%. If they wish to introduce larger rises, a referendum must be held.
Government figures reveal that the average band D council tax set by local authorities in England for 2024/25 was £2,171. .
New car tax rates will come into effect next April, impacting anyone purchasing a new vehicle. If you buy a new vehicle emitting between 1-50 g/km of CO2, including hybrid vehicles, your car tax will increase from £10 to £110.
The rates for new cars emitting 51-75g/km of CO2 will rise from £30 to £130, while all other rates for cars emitting 76g/km of CO2 and above will double. For a car emitting over 255g/km of CO2, the first-year rate will double from £2,745 to £5,490.
Cars in the lowest emissions category currently exempt from car tax will also start being charged £20.
Alcohol duty rates applicable to all non-draught products – including wine, spirits and bottled beer or cider – will increase by 2.7% from February 1. However, duty on draught alcohol – served in pubs, bars and restaurants – will be reduced by 1.7%.
Capital Gains Tax.
The Capital Gains Tax on assets has seen an increase from 10% to 18% for basic rate taxpayers, and from 20% to 24% for higher and additional rate taxpayers. This change was implemented immediately after the Budget confirmation and will impact anyone planning to sell, gift, exchange or otherwise dispose of a capital asset next year.
It’s important to note that Capital Gains Tax is levied on the profit made, not the selling price of the asset.
Income Tax thresholds are currently frozen until 2028. This means workers may end up paying more tax as their wages increase – either by becoming liable for tax for the first time, or by moving into a higher tax bracket.
The personal allowance stands at £12,570 a year before tax is due. The threshold for when you start paying National Insurance as an employee remains unchanged.
The main Inheritance Tax threshold will stay at £325,000 until 2030, including the additional rate applicable when passing on a property, which is set at £175,000. The annual gift allowance also remains at £3,000.
Inheritance Tax is sometimes paid on the estate (property, possessions and money) of someone who has passed away. From April 2027, pensions will also be included as part of your estate.