What Businesses and Individuals Need to Know
From 1 April 2025, a series of tax and regulatory changes come into effect which will have significant implications for individuals, businesses, and investors. Below is an overview of the key updates, along with insights on how they may impact you or your business.
Vehicle Excise Duty (Road Tax) – Major Increases Ahead
A key change is the introduction of road tax for electric vehicles (EVs) for the first time, alongside broad increases for all other vehicle types:
✓ New EVs: First-year road tax will be £10 (previously £0). From the second year, vehicles under £40,000 will pay £190 annually.
✓ Luxury EVs (£40,000+): These will now attract £600 per year, which includes the £410 “expensive car supplement.”
✓ Plug-in Hybrids (1–50 g/km CO₂): First-year tax rises to £110 (from zero).
✓ Cars emitting 51–75 g/km CO₂: First-year charge jumps from £30 to £135.
✓ Petrol & Diesel Vehicles:
✓ Annual flat rate increases to £195.
✓ First-year charges for higher emission models will double, for example:
✓ A VW Golf 1.5 TSI e-hybrid buyer will pay £220 more in the first year.
✓ A BMW X5 M60i will incur a £2,745 first-year tax increase.
Please note that hybrid vehicles no longer qualify for VED discounts, and vehicles originally priced above £40,000 attract an additional “luxury car” levy.
Stamp Duty Land Tax (SDLT) – Thresholds Reduced
From 1 April, SDLT reliefs are being rolled back:
✓ The standard threshold reverts to £125,000 (from £250,000).
✓ For first-time buyers, the threshold drops to £300,000, and relief only applies to properties up to £500,000.
✓ A 5% SDLT surcharge for second homes and investment properties becomes effective from 31 October 2024.
Property investors should note that residential property investment is becoming less tax-efficient, making strategic planning more essential than ever.
Furnished Holiday Lettings (FHL) – Tax Reliefs Withdrawn
From 1 April (for companies) and 6 April (for individuals, trusts, and partnerships), FHL properties will no longer qualify for beneficial tax treatment:
✓ Capital allowances are no longer available.
✓ Existing FHL-specific reliefs will cease.
This change brings FHL income in line with long-term residential lets, impacting both income tax and capital gains tax planning.
Capital Gains Tax (CGT) – Rates and Reliefs
As a reminder, CGT rates are now:
✓ 18% for basic rate taxpayers
✓ 24% for higher and additional rate taxpayers
Importantly, the 24% rate on residential property has been extended beyond March 2025, equalising CGT rates across asset classes.
Dividend Income – No Change to Allowance or Rates
The dividend allowance remains at £500 per year. Tax rates are:
✓ 8.75% (basic rate)
✓ 33.75% (higher rate)
✓ 39.35% (additional rate)
National Minimum Wage – New Rates from 1 April
From 1 April 2025:
✓ 21+ (National Living Wage): £12.21 per hour (up from £11.44)
✓ 18–20: £10.00 per hour
✓ Apprentices & under 18s: £7.55 per hour
Businesses must review payroll systems to ensure compliance with the new rates.
Corporation Tax & Full Expensing
Corporation tax remains at:
✓ 25% for profits over £250,000
✓ 19% for profits under £50,000
The full expensing regime has now been made permanent, allowing companies to claim a 100% deduction on qualifying capital expenditure — providing an effective tax saving of up to 25%.
Company Car Tax – Gradual Increases
For the 2025–26 tax year:
✓ EVs: Benefit-in-kind (BIK) rate increases to 3%, rising 1% annually to reach 9% by 2030.
✓ Petrol & Diesel Vehicles: BIK rates will range from 25% to 37%, depending on CO₂ emissions.
This continues to reinforce the government’s commitment to encourage greener company fleets.
Air Passenger Duty (APD) – Higher Rates on Flights
APD will increase as follows:
✓ Domestic flights: From £8 to £16 (standard fare)
✓ Band A (up to 2,000 miles): £15 (economy), £32 (premium)
✓ Band B (2,001–5,500 miles): £102–£244
✓ Band C (5,500+ miles): £106–£253
✓ Private Jets (19+ seats): Rates up to £1,141 for long-haul flights
The government expects to raise £520 million from these changes this year.
Our View
At Sterling Finance (UK) Limited, we recognise that this year’s tax changes bring a combination of increased costs, reduced reliefs, and complex new rules. Whether you’re a business owner, property investor, or individual taxpayer, it’s vital to understand these changes and proactively plan your finances.
If you would like personalised advice or support in adapting to these new regulations, please contact our team today.
📞 Call us on 0161 339 4989
🌐 www.sterlingfinance.net