28 April 2025
Below is a summary of the key updates.
Making Tax Digital for Income Tax
The rollout of Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) is progressing in phases:
- From April 2026: MTD will apply to sole traders and landlords with annual income over £50,000.
- From April 2027: The threshold will be lowered to £30,000.
- From April 2028: MTD will extend to those earning over £20,000.
These changes mean that more taxpayers will be required to keep digital records and submit quarterly updates to HMRC. We recommend reviewing your current record-keeping systems to ensure you're prepared ahead of time.
Late Payment Penalties
As part of the MTD expansion, a new penalty structure for late payments of VAT and Self-Assessment Income Tax will take effect from April 2025:
- 3% of the tax due if payment is 15 days late
- An additional 3% if payment is 30 days late
- 10% per annum interest on balances overdue by 31 days or more
To avoid these penalties, we advise starting your returns early and ensuring payments are made on time.
Employer National Insurance Contributions (NICs)
While not a new announcement in the Spring Statement, it's important to be aware of the following changes that came into effect on 6 April 2025:
- The employer NIC rate increased by 1.2%, bringing the total to 15%
- The Secondary Threshold (the point at which employers begin paying NICs) was reduced from £9,100 to £5,000
These adjustments may lead to higher payroll costs, so it’s a good time to review your employment structure and budget.
Capital Gains Tax (CGT)
Changes to CGT were confirmed, impacting those planning to sell qualifying business assets:
- From 6 April 2025, the CGT rate for both Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) will increase to 14%
- From April 2026, the rate will rise further to 18%
If you're considering a disposal of qualifying assets, now may be the time to review your timing and assess the potential tax implications.
Need help navigating the new tax landscape?
Get in touch with our team today to schedule a consultation and ensure you're fully prepared.
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