As the new tax year begins, several important changes have come into effect. Here’s a quick overview to keep you informed:
1. Employer National Insurance Contributions (NICs) Increase
- Rate Rise: Employer NICs have increased from 13.8% to 15% on salaries above £5,000.
- Threshold Adjustment: The secondary threshold has been reduced from £9,100 to £5,000.
- Relief: The Employment Allowance has doubled from £5,000 to £10,500, and the £100,000 eligibility cap has been removed, allowing more businesses to benefit.
2. Capital Gains Tax (CGT) Changes
- Business Asset Disposal Relief: The CGT rate has increased from 10% to 14% for disposals made on or after 6 April 2025. This rate is set to increase further to 18% from April 2026.
3. National Minimum and Living Wage Increases
- National Living Wage (21 and over): Increased to £12.21 per hour.
- 18-20 Year Old Rate: Increased to £10.00 per hour.
- 16-17 Year Old and Apprentice Rate: Increased to £7.55 per hour. These changes may impact your payroll expenses.
4. Dividend Allowance Reduction
- The tax-free dividend allowance remains at £500 for the 2025/26 tax year, down from £1,000 in previous years.
5. Making Tax Digital (MTD) Expansion
- Late Filing Penalties: Penalties for late filing of self-assessment tax and VAT returns have increased, ranging from 3% to 10%.
- MTD Thresholds: From 2026, businesses with annual gross incomes over £50,000 must use the digital system, with thresholds dropping to £30,000 and £20,000 in subsequent years.
Need Assistance? If you’re unsure how these changes affect you or your business, feel free to reach out. I’m here to help you navigate the new tax landscape with clarity and confidence.
