Key finance changes to have on your radar in 2025

Key finance changes to have on your radar in 2025

2024 has been challenging for businesses. Our survey of south-west organisations earlier this year revealed that key concerns centred around rising operational costs and unpredictable customer preferences. And with the Autumn Budget raising new challenges, there is much for businesses owners to consider. We cover a few of the changes to have on your radar in 2025, which may be positive for workers, but could see businesses bearing the brunt of higher outgoings.

National Insurance (NIC) rates for individuals and the self-employed will remain the same, but the rate of employer NIC is increasing from 13.8% to 15%, with effect from 6 April 2025, and the threshold at which employers become liable to pay NIC will also reduce. If you are a shareholder in a small company, it’s wise to consider your remuneration strategy – for example, it may now be even better to extract dividends rather than salary from your business.

As of 30 October 2024, the lower rate of Capital Gains Tax (CGT) increased from 10% to 18% and the higher rate of CGT increased from 20% to 24%. Looking ahead, the CGT rate applicable to disposals qualifying for Business Asset Disposal Relief (BADR) will increase from 10% to 14% with effect from 6 April 2025 and will rise again to 18% with effect from 6 April 2026. As a result, if you are considering the sale or liquidation of your business, you may wish to do so before the end of the 24/25 tax year to crystallise the benefit of the current BADR rate.

The National Living Wage will increase by 6.7% to £12.21 per hour from April 2025 and, for 18–20-year-olds, the National Minimum Wage will rise by 16.3% to £10 per hour. This, combined with changes to employer NIC, is likely to have a significant impact on businesses, so we’d advise seeking guidance and preparing your cashflow forecasts to fully understand your position.

Inheritance Tax (IHT) thresholds are frozen at their current levels until 5 April 2030, whilst unused pension funds and death benefits payable from a pension into an estate will be brought into the IHT regime from 6 April 2027 - these assets previously benefitted from a full exemption. Agricultural Property Relief and Business Property Relief will also be reformed from April 2026. These announcements made in relation to IHT are significant, particularly where pensions are concerned. So, we recommend seeking advice to gauge any potential impacts and revisit any IHT planning advice to confirm its validity.

Fuel duty rates will remain frozen for 2025-26 and the planned inflation increase will not take place. The temporary 5p cut in fuel duty rates will be extended by 12 months, to expire on 22 March 2026.

The 100% First Year Allowances (FYA) for qualifying expenditure on zero-emission cars and electric vehicle charge points will be extended to 31 March 2026 for corporation tax purposes and 5 April 2026 for income tax purposes. Investment in electric vehicles also continues to be a tax efficient choice, so, if you’re considering upgrading your fleet, think about doing so before March/April 2026 to make use of the allowances available.

How can we help?
Business finances can be complex, time consuming and stressful, particularly if times are tight or tax deadlines are looming. At Monahans, our role is to ensure that clients don’t have to lie awake at night worrying. The businesses that we work with often cite the value of emotional reassurance - knowing that an expert is just at the end of the phone and is working with their best interests in mind. Not to mention keeping track of important deadlines so that they don’t have to.

But by understanding your tax liabilities now, and planning around them, you will be in the best possible position for mitigating their impact. Plus, having this knowledge in your arsenal, even if it isn’t all rosy, will likely give you an encouraging sense of control during this challenging time.

The value of an accountant does not just lie in what they can do on a business’s behalf but also in how they can empower individuals within a business. We want to help you to regain control of your finances, and ensure that your money is working for you, rather than the other way around.

Whilst unpredictability is inevitable, we can help you to get ahead of whatever is coming your way. The most important thing to remember is that no matter your situation, there are always solutions available, and the more time you can give yourself, the more chance you will have to pursue one of these options.

Don’t bury your head in the sand and hope it goes away, reach out for support from the team at Monahans. We are happy to help.

For a more detailed view of the financial landscape, our Autumn Budget 2024 guide sets out exactly what you need to know, download your copy today.

Stephanie Hurst