What’s changing for 2025-26
Tax changes that come into force from 6th April affecting businesses and individual taxpayers.
- National Insurance Contributions (NICs)
The rate for employer’s National Insurance contributions increased by 1.2% from 13.8% to 15%. This affects all employers, and it is coupled with a reduction in the secondary threshold at which they start paying NIC on employees’ salaries from £9,100.00 to £5,000.
The employment allowance has been increased to £10,500 from £5,000. The £100,000 threshold has also been removed, making it available to all eligible employers.
- HMRC Interest Rates & Penalties
HMRC interest rates for late payments will be increased by 1.5% to base rate plus 4%, up from the current plus 2.5% premium. It is currently 8.5% and applies to all taxes.
From 1 April late payment penalties have also increased. Those failing to pay income tax under self-assessment and VAT within a month face a 10% penalty increased from 4%. Penalties have risen from 2% to 3% of unpaid tax at 15 days, 2% to 3% at 30 days, and 4% to 10% from day 31.
- Capital Gains Tax
For businesses, the rate for business asset disposal relief (BADR) and investors’ relief will increase 4% from the current 10% to a standard rate of 14%. It will increase further from 6 April 2026 to 18% to equalise with the main lower rate of capital gains tax.
- Vehicle Excise Duty (VED) for Electric Vehicles
Electric vehicles are no longer exempt from VED. New zero-emission cars registered from 6 April 2025 are subject to the first-year rate based on CO₂ emissions, followed by the standard annual rate. Existing electric vehicles registered between 1 April 2017 and 31 March 2025 will also begin paying the standard rate.
- Furnished Holiday Lets (FHL)
The furnished holiday lets regime will be abolished, effective from 1 April for companies and 6 April for individuals, trusts and partnerships. Income from FHL will be treated the same as long-term lets. Joint property owners who are married or civil partners will have profits or losses split equally unless HMRC have been informed that entitlement to income and property is in unequal shares.
- Double Cab Pick-ups
Starting on 1 April for corporation tax and 6 April for income tax, double cab pick-up vehicles (DCPUs) with a payload of one tonne [1,016 kilos] or more will be treated as cars, not commercial vehicles for certain tax purposes.