Making Tax Digital (MTD)

Making Tax Digital for Income Tax (filing draft accounts to HMRC every 3 months in a digital format) will be extended to sole traders and landlords with gross income over £20,000 by the end of this Parliament.

This expands the rollout of MTD for Income Tax, which commences April 2026 for sole traders and landlords with income over £50,000 and April 2027 for those with income over £30,000.

1.2% increase in National Insurance contributions for Employers

From April 2025, there will be an increase in the amount of National Insurance (NI) contributions an employer must make. NI Contributions will increase by 1.2% to a total of 15%, and the National Insurance primary threshold, when employers begin to pay NI, will be lowered from £9,100 to £5,000.

Although the NI threshold has been lowered, the amount of National Insurance a business can offset will increase as the employment allowance will change from £5,000 to £10,500.

Capital Gains Tax

With effect for disposals on or after 30 October 2024, the main rates of capital gains tax will be increased from 10% and 20% to 18% and 24% (the rates now become the same rates of CGT as for residential property disposals).

The CGT rate for Business Asset Disposal Relief (formerly known as ‘Entrepreneurs’ Relief’) will increase from 10% to 14% for disposals on or after 6 April 2025 and from 14% to 18% for disposals made on or after 6 April 2026.

Taxation of Company Cars

The government is setting company car tax rates for tax years 2028 to 2029 and 2029 to 2030:

  • Percentages for zero-emission and electric vehicles will increase by 2% per year in 2028/29 and 2029/30, rising to 9% in the tax year 2029/30.
  • Percentages for all cars with emissions of 1 to 50g of CO2 per kilometre, including hybrid vehicles, will rise to 18% in the tax year 2028/29 and 19% in the tax year 2029/30.
  • Percentages for all other vehicle bands will increase by 1% per year in the tax years 2028/29 and 2029/30. This will be to a maximum appropriate percentage of 38% for 2028/29 and 39% for 2029/30.

Furnished Holiday Lettings (FHL) regime abolished

The FHL regime will be abolished from April 2025, meaning short-term and long-term lets will be treated the same for tax purposes. Individuals with FHL and non-FHL properties will no longer need to calculate and report income separately.

Other announcements

  • The main rate of Corporation tax for businesses with taxable profits over £250,000 will remain at 25% until the next election
  • Personal tax thresholds – i.e., personal allowance, basic and higher-rate thresholds for income tax remain frozen until April 2028 at the current levels of £12,570 and £50,270.
  • From 31 October 2024, the Higher Rates for Additional Dwellings (HRAD) surcharge on Stamp Duty Land Tax (SDLT) will increase from 3% to 5%.