National minimum wage

From 1 April, national minimum wage rates will rise, with a 6.7% increase for most workers receiving this pay. The national living wage—applicable to workers aged 21 and over—will increase to £12.21 per hour, up by 77p from the previous rate of £11.44. The rate for 18–20-year-olds is gradually being brought in line and will rise to £10 per hour.

Apprentices under 19, those aged 19 or over in the first year of their apprenticeship, and workers under 18 will receive £7.55 per hour.

For context, just two years ago, the national living wage stood at £10.42 per hour—highlighting the pace of recent increases.

Employer’s National Insurance (NI)

From 6 April 2025, the start of the new tax year, Employer National Insurance Contributions (NICs) will rise from 13.8% to 15%. At the same time, the threshold at which employers become liable to pay NICs will fall significantly—from £175 per week to £96.15 per week.

These changes will increase employment costs for all businesses. However, a modest offset is being provided through an increase in the Employer’s Allowance. At present, the maximum allowance you can claim is £5,000 per tax year. However, from April 2025, this limit will increase to £10,500.

Stamp Duty Land Tax (SDLT)

Stamp Duty Land Tax (SDLT) rates have now reverted to their standard, non-discounted levels, effectively ending the temporary tax relief and prompting a surge in property transactions ahead of the 31 March deadline.

From 1 April, the SDLT threshold for all buyers has been halved from £250,000 to £125,000. For first-time buyers, the threshold will drop from £425,000 to £300,000, while the maximum property value eligible for first-time buyer relief is reduced from £625,000 to £500,000.

Capital gains tax (CGT)

Regarding Capital Gains Tax (CGT), it’s worth noting that rates were increased during the Autumn Budget, so this serves as a reminder that the current rates now in effect are 18% and 24%.

Additionally, from 31 October 2024, owners of second homes and landlords will face a 5% surcharge on Stamp Duty Land Tax (SDLT), further increasing the cost of investing in additional residential properties.

On a more positive note, the temporarily reduced CGT rate of 24% on residential property sales—initially set to expire on 31 March 2025—has been extended. Originally introduced by the previous government in April 2024, this measure ensures CGT rates are now aligned across different asset classes based on the taxpayer’s income band.

Road tax

Road tax is set to increase across various vehicle categories, with higher rates applying based on vehicle size. Notably, for the first time, all electric vehicles will be subject to road tax, accompanied by significant increases in Vehicle Excise Duty (VED).

From this year, newly registered electric vehicles will face a first-year road tax of £10, rising from the current £0. Starting in the second year, EVs originally priced under £40,000 will be subject to an annual charge of £190. Meanwhile, higher-end electric vehicles with a list price exceeding £40,000 will incur a yearly charge of £600 from the second year onwards, which includes the £410 ‘expensive car supplement’.

Non-electric vehicle (non-EV) road tax rates will increase across the board in line with inflation, with certain categories experiencing more substantial rises.

Vehicles emitting between 1–50g/km of CO2 — a category that includes most plug-in hybrids — will see their first-year tax increase to £110. Currently, hybrids in this emissions band pay no Vehicle Excise Duty (VED) in the first year, while petrol and diesel vehicles are charged £10.

For new cars producing between 51–75g/km of CO2, the first-year car tax will rise from £30 (or £20 for hybrids) to £135.

The standard flat rate of road tax for petrol and diesel cars registered after 1 April 2017 will also increase, going from £190 to £195.

However, the most notable rise comes in the first-year charge: new petrol and diesel vehicles that previously faced a first-year VED of £220 will now be charged £440.

According to the RAC, typical tax increases could be significant. For instance, the owner of a new VW Golf 1.5 TSI e-Hybrid, priced at around £28,000, will see an additional £220 in their first-year tax bill.

In contrast, a high-end model like the BMW X5 M60i SUV — which starts at £86,000 and is equipped with a 4.4-litre engine — will face a staggering £2,745 increase in first-year road tax.

The RAC also highlighted that hybrid vehicles are no longer eligible for a tax discount. Furthermore, if the vehicle’s original list price exceeded £40,000, owners may be liable for the ‘luxury car tax’ — an additional £425 added to the annual VED.

Furnished Holiday Lets (FHL)

From 1 April for companies—and from 6 April for individuals, trusts, and partnerships—income from furnished holiday lets (FHLs) will be taxed in the same way as income from long-term residential lets. FHLs will no longer qualify for advantageous capital allowances, and entitlement to existing reliefs will come to an end.

Late payment penalties

From 1 April 2025, late payment penalties for unpaid tax liabilities will rise significantly for VAT taxpayers and those participating in the Making Tax Digital (MTD) for Income Tax Self Assessment beta trial.

Under the updated rules, the penalty for payments made 31 days or more late will more than double—from the current 4% to 10%. For payments made up to 30 days late, the penalty will increase from 2% to 3%.

These changes will apply to all VAT-registered businesses, volunteers involved in MTD testing, and taxpayers operating under the Schedule 26 regime. The revised penalties will also extend to any future tax regimes that fall under Schedule 26.

Dividends

The dividend allowance remains unchanged at £500 per tax year. Tax rates on dividend income also stay the same: 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers, and 39.35% for those in the additional rate band.

Corporation tax

Corporation tax rates remain unchanged, with the main rate holding at 25% and the 19% rate still applying to companies with profits under £50,000.

The now-permanent full expensing allowance continues to offer substantial tax relief, allowing businesses to claim up to a 25% in-year deduction for qualifying capital expenditure on plant and machinery.

Company Car Tax

Company car tax rates are set to rise in the 2025–26 tax year. For electric vehicles (EVs), the benefit-in-kind (BiK) rate will increase to 3%, with a planned annual rise of 1%—reaching 9% by 2030.

Petrol and diesel vehicles will be subject to BiK rates ranging from 25% to 37%, depending on their CO2 emissions. For example, cars emitting 80–84 g/km of CO2 will be taxed at 22%, rising to 26% for those in the 100–104 g/km range, and peaking at 37% for vehicles emitting 170 g/km or more.

BiK tax applies to any employee or director earning over £8,500 per year who receives a company car as part of their remuneration package.

Air passenger duty (APD) 

Air Passenger Duty (APD) rates are set to rise, affecting both domestic and international travel. For domestic one-way flights, the reduced rate will increase to £8, while the standard rate will rise to £16.

For short-haul international flights (Band A – up to 2,000 miles), the APD will be £15 per passenger in economy class and £32 for business or premium class on a standard fare.

Long-haul flights (Band B – 2,001 to 5,500 miles) will be subject to APD rates of £102 in economy and £244 in premium cabins. For ultra-long-haul flights (Band C – over 5,500 miles), the rates increase to £106 and £253 respectively.

These higher APD rates are expected to generate £520 million for the Treasury in the current tax year alone. For larger private jets with more than 19 seats, APD will rise by an additional 50%. This will see charges ranging from £142 for domestic and Band A flights, up to £1,097 for Band B, and reaching £1,141 for Band C destinations, which include the west coast of the US, Asia, and Australia.