Six HMRC tax changes coming in April with millions of UK households warned
The Labour Party government is set to unveil its Spring Statement on March 26, with the government set to slash Department for Work and Pensions ( DWP ) benefits.
Five major HMRC changes are coming in April - with millions across the country warned. The Labour Party government is set to unveil its Spring Statement on March 26, with the government set to slash Department for Work and Pensions ( DWP ) benefits.
But ahead of that, b usinesses are preparing to pay more tax next month after changes rolled out by Chancellor Rachel Reeves. The Spring Statement comes on March 26 - months after the Autumn Budget.
The Autumn fiscal Statement came in late October, with b usinesses being warned about the five significant tax changes from April 6, 2025, as highlighted by the chartered accountancy body ICAEW.
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Many of these changes were unveiled by Chancellor Ms Reeves back on October 30. Here is a full of the changes being implemented by HMRC that will impact businesses next month:
Increase to the rate paid towards National Insurance contributions (NICs)
In the 2024 Autumn Budget, Chancellor Rachel Reeves announced the rate of employers’ NICs will increase from 13.8% to 15%, from April 2025. The level at which employers start paying NICs (the secondary threshold) will also reduce from £9,100 to £5,000 per year.
Independent HR consultant Emma Cromarty says a proactive approach is key—companies are not waiting until April 2025 to react.
She says: “SMEs are already thinking carefully about ways to reduce overheads through different ways of working, using technology, and other methods of delivering their services and products.
“My clients are also consulting with staff to reduce their hours or make redundancies, and looking to reduce supply chain costs and increase prices.”
Changes to the National Insurance employment allowance
To help small businesses offset the increased NIC costs, the Employment Allowance, which helps eligible employers reduce their NIC liability, will increase from £5,000 to £10,500, and the £100,000 eligibility threshold will be removed.
Not all companies will be affected. A few will actually benefit from the increased Employment Allowance. But many others face significantly higher costs from the rising contribution rate and lower threshold.
Payroll is the biggest cost for many SMEs, so this could significantly impact their cash flow and profits.
For example, employers’ NICs for minimum wage employees will rise from £1,617 to £2,583, according to the Centre for Policy Studies. This will contribute to 2025 being the most expensive year on record for employers of minimum wage workers, it said.
Double cab pick ups
Vehicles purchased from April 2025 will be classified as company cars for benefit in kind, capital allowances, and some deductions from business profits and subject to increased tax rates.
HMRC has updated its legislation regarding the classification of double cab pick-ups, with regards to BIK, to be considered as cars as opposed to commercial vehicles from 6 th April 2025. Double cab pick-ups will be moving away from the previously set flat rate of £3,960 and instead will be subjected to the car BIK rate, which can vary between 2% and 37% based on the vehicle’s CO 2. From 6 th April 2025, electric double cab pick-ups with over 1-tonne payload will be subject to company car BIK rates (3%), increasing by 1% annually until 2028.
HMRC will consider a vehicle's "primary suitability at the time it was made" for capital allowances, benefit in kind rules, and some business profit deductions.
Furnished holiday lets (FHLs)
The Furnished Holiday Letting regime treats qualifying residential short-term lettings as a trade for certain tax purposes. Mortgage interest on FHLs is currently treated as a deduction from rental income for income tax purposes. From April 2025, relief will instead be given as a 20% tax credit for higher and additional rate taxpayers. This means a reduction in tax relief for individuals from 40% and 45% respectively.
Capital Gains Tax on disposal of FHLs may currently qualify for Business Asset Disposal Relief (BADR), where the first £1m of lifetime gains are taxed at 10%. Alternatively, the gain can be ‘rolled over’ on purchases of certain new business assets.
Rates and thresholds
You normally operate PAYE as part of your payroll so HMRC can collect Income Tax and National Insurance from your employees. Your payroll software will work out how much tax and National Insurance to deduct from your employees’ pay.
The amount of Income Tax you deduct from your employees depends on their tax code and how much of their taxable income is above their Personal Allowance.
Interest rates rise on unpaid tax liabilities
Stephen Relf, Institute of Chartered Accountants in England and Wales' (ICAEW) technical manager for Tax, shared: "The start of the new financial year in April will see some significant tax changes for businesses, some of which were announced at the Autumn Budget 2024, including the changes to national insurance contributions rates, thresholds, and allowances for employers, all of which continue to attract headlines.
"Others first saw life under the previous government and have since been tweaked, such as the abolition of the special tax rules for furnished holiday lets. Either way, they all represent important changes from this April, so businesses need to be prepared.”