The UK tax year 2025/2026, running from 6 April 2025 to 5 April 2026, introduces several significant changes affecting individuals, businesses, and investors. Here’s an overview of the key updates:

Personal Taxation

Income Tax

• Personal Allowance: Remains at £12,570
• England, Wales, and Northern Ireland:
  • Basic Rate (20%): Up to £37,700
  • Higher Rate (40%): £37,701 to £125,140
  • Additional Rate (45%): Above £125,140
• Scotland:
  • Starter Rate (19%): Up to £2,827
  • Basic Rate (20%): £2,828 to £14,921
  • Intermediate Rate (21%): £14,922 to £31,092
  • Higher Rate (42%): £31,093 to £62,430
  • Advanced Rate (45%): £62,431 to £125,140
  • Top Rate (48%): Above £125,140

National Insurance Contributions (NICs)

• Employers:
  • Rate Increase: From 13.8% to 15%.
  • Secondary Threshold: Lowered from £9,100 to £5,000 per year
• Employment Allowance:
  • Increase: From £5,000 to £10,500
  • Eligibility Expansion: Removal of the £100,000 threshold, benefiting more small businesses

Statutory Payments

• Statutory Sick Pay (SSP): Increased to £118.75 per week from 6 April 2025

Capital Gains Tax (CGT)

• General Assets:
  • Basic Rate Taxpayers: Rate increased from 10% to 18%
  • Higher and Additional Rate Taxpayers: Rate increased from 20% to 24%
• Business Asset Disposal Relief (BADR):
  • Rate: Increased from 10% to 14% effective 6 April 2025
  • Future Increase: Set to rise to 18% from 6 April 2026
• Carried Interest:
  • Rate: Replaced with a flat rate of 32% from 6 April 2025
  • Future Taxation: From 6 April 2026, carried interest will be taxed under income tax rules with a 72.5% multiplier applied

Inheritance Tax (IHT)

• Agricultural Assets:
  • New Tax: A 20% inheritance tax on agricultural assets over £1 million is set to commence in 2026
  • Impact: This announcement has led to concerns among farmers about the potential financial burden on family-owned farms

Property and Stamp Duty

• Stamp Duty Land Tax (SDLT):
  • Threshold Reduction: From 1 April 2025, the SDLT threshold was lowered from £250,000 to £125,000
  • First-Time Buyers: Threshold reduced from £425,000 to £300,000
• Market Impact:
  • Transaction Surge: March 2025 saw a spike in property transactions as buyers aimed to complete purchases before the changes
  • April Slowdown: A significant drop in transactions occurred in April 2025, marking the slowest month since May 2020

Business and Employment

• Business Rates Relief:
  • Retail, Hospitality, and Leisure: Extended for another year from April 2025 at a reduced discount rate of 40%
  • Private Schools: Charitable relief ended in April 2025
• Apprenticeship Levy:
  • Replacement: Replaced by the Growth and Skills Levy from April 2025
• Minimum Wage:
  • Increase: Set to £12.21 per hour, a 6.7% rise

Other Notable Changes

• Vehicle Excise Duty (VED):
  • Zero-Emission Vehicles: From 1 April 2025, zero-emission cars registered on or after 1 April 2017 are subject to the standard annual VED rate, ending previous exemptions
  • Alternative Fuel Vehicles: The £10 reduction for these vehicles has been removed, aligning their rates with standard vehicles
• Working Tax Credit:
  • Termination: Ended on 5 April 2025, with claimants transitioning to Universal Credit or Pension Credit

These changes reflect the government’s efforts to adjust fiscal policies in response to economic conditions and policy objectives. It’s advisable to consult with a tax professional to understand how these changes may affect your personal or business finances.