New HMRC Rules Every Business Owner Must Know in 2025

From 6 April 2025, a new tax year begins, bringing important changes for businesses across the UK. These include updates to business rates, Employment Allowance, National Minimum Wage, and strengthened compliance measures under Companies House reforms.


While many of the reforms were already signalled in earlier Budgets, 2025 is the first year that some of them take effect. Others, such as Making Tax Digital for Income Tax Self Assessment, are not yet in force but require preparation.


This guide sets out the new HMRC rules every business owner must know in 2025, helping you prepare early and avoid unexpected costs.


Key Changes for the 2025/26 Tax Year

Income Tax and Dividends

  • Tax thresholds remain frozen, which means more people are drawn into higher tax bands as wages rise.
  • The dividend allowance remains at £500, having been reduced in April 2024.
  • Dividend tax rates are 8.75%, 33.75%, and 39.35% depending on your income band.


Action point: Small business owners relying on dividends should plan carefully to manage tax exposure.


Capital Gains Tax

  • The Annual Exempt Amount is fixed at £3,000 for individuals and £1,500 for most trusts.
  • Proceeds above £50,000 must be reported, regardless of whether tax is due.


Action point: Keep good records of property or share disposals and consider spreading gains across multiple tax years where possible.


National Insurance and Employment Allowance

  • From 6 April 2025, the Employment Allowance increases from £5,000 to £10,500. Additionally, the previous £100,000 annual Class 1 National Insurance liability cap has been removed, making more businesses eligible for this allowance.
  • Thresholds for employee and self-employed contributions remain frozen, meaning higher effective contributions in real terms.


Action point: Ensure your payroll system applies the higher allowance from the first month of the new tax year.


Employer National Insurance Contributions

  • The rate increases from 13.8% to 15% from 6 April 2025
  • Secondary threshold reduces from £9,100 to £5,000 per employee
  • These changes significantly increase employer costs, which the higher Employment Allowance partly offsets


Making Tax Digital

  • MTD for VAT is already mandatory for all VAT-registered businesses.
  • MTD for Income Tax Self Assessment has been delayed:
  • - From April 2026: businesses and landlords with income above £50,000
  • - From April 2027: those earning over £30,000
  • - From April 2028: those earning over £20,000 (planned)


Action point: While not compulsory yet, moving to digital software now will reduce stress when MTD goes live.


Payroll: National Living Wage and Minimum Wage

From 1 April 2025, the following apply:

  • National Living Wage (age 21 and over) increases to £12.21 per hour.
  • Ages 18-20: £10.00 per hour
  • Ages 16-17: £7.55 per hour
  • Apprentice rate: £7.55 per hour


Statutory Leave and Pay

  • Paternity leave reforms, effective since March 2024, continue in 2025. Eligible employees can now take two separate one-week blocks within the first year after birth or adoption.
  • Neonatal Care Leave and Pay is expected but not yet in force as of April 2025.
  • Statutory Sick Pay remains unchanged, with waiting days still applying.
  • Sexual harassment prevention duties for employers came into force in October 2024, requiring reasonable steps to protect employees.


Action point: Update HR policies to reflect these entitlements and duties.


Companies House Reforms

  • All companies must provide a registered email address and maintain an appropriate registered office.
  • Identity verification for directors and Persons of Significant Control is planned but not yet compulsory for all in 2025.


Action point: Ensure company records are up to date and prepare ID documents for verification when required.


Business Rates

From 1 April 2025 to 31 March 2026 in England:

  • Small business multiplier: 49.9p
  • Standard multiplier: 55.5p
  • Retail, hospitality and leisure relief continues at 40%, capped at £110,000 per business.


Action point: Check with your local council if you qualify for relief and apply promptly.


Company Cars

  • Benefit-in-kind (BIK) rates are published in advance and remain a key cost consideration for employers providing cars.
  • Advisory Fuel Rates are updated quarterly, so employers must use the latest figures for reimbursements.


Action point: Always check the current rates before processing payroll or expense claims.


Property and Foreign Income

  • UK residents must declare worldwide income, including foreign dividends, interest, or rental profits.
  • Property owners face tighter reporting obligations and reduced allowances compared with previous years.


Action point: Complete the Self Assessment accurately and claim available reliefs where applicable.


Compliance Calendar for 2025/26

  • 1 April 2025 – New minimum wage rates and business rates apply.
  • 6 April 2025 – New tax year; Employment Allowance increases to £10,500.
  • 31 October 2025 – Paper Self Assessment deadline for 2024/25.
  • 31 January 2026 – Online Self Assessment deadline for 2024/25.
  • Quarterly – Advisory Fuel Rates updated; check before reimbursing staff.


FAQs

  • Do the new HMRC rules mean I must join Making Tax Digital now?

    No. MTD for Income Tax starts in April 2026 for incomes above £50,000, and in April 2027 for incomes above £30,000.

  • What is the biggest cost saving in 2025?

    The increase in the Employment Allowance to £10,500 offers substantial NIC savings for eligible businesses.

  • Has Statutory Sick Pay changed in 2025?

    No. Waiting days and the lower earnings limit remain in place.

  • What are the new minimum wage rates?

    The National Living Wage increases again from 1 April 2025, covering all workers aged 21 and over. Other minimum wage bands rise, too.

  • Do directors have to verify their identity with Companies House in 2025?

    Not yet. Identity verification is planned but not fully rolled out. What is compulsory now is having a registered email and a proper registered office address.



  • What is the Capital Gains Tax allowance?

    It is fixed at £3,000 from 6 April 2024 and remains the same in 2025/26.

  • How do the employer National Insurance changes affect small businesses?

    While employer NIC rates increase to 15% and thresholds decrease to £5,000, the doubled Employment Allowance (£10,500) will offset much of this cost for eligible small businesses.

Conclusion

The new HMRC rules that every business owner must know in 2025 focus on payroll, allowances, and compliance. Key actions include applying the larger Employment Allowance, updating payroll for the new minimum wage rates, maintaining accurate Companies House details, and preparing for the digital tax future.


By planning early and seeking professional guidance, you can reduce risk, improve compliance, and make the most of the reliefs available to your business.


At 10.CA, we help UK businesses stay ahead of HMRC rules. Whether you’re a sole trader, small business, or limited company, our experts can guide you through tax, payroll, and compliance changes for 2025 and beyond.


Disclaimer: This guide summarises the current key changes for 2025. Tax legislation is complex, and individual circumstances differ. Check GOV.UK for official updates and consult a qualified advisor before taking action.

Are your finances at risk of cyber-attack? Planning for the worst

By Charlie Flockhart • October 5, 2026
According to the latest Hiscox Cyber Readiness Report, almost two in five small businesses in the UK suffered a successful cyber-attack in the last year, with each attack costing an average of £26,650. Globally, cyber incidents cause around 32 hours of operational disruption a year on average. Cyber-attacks are no longer exceptional events, being viewed more as recurring costs, so businesses must prepare themselves financially for the impact. How should you prepare your finances in advance of a cyber-attack? A cyber-attack is slowly and sadly becoming a reality for many SME owners across the UK. To prepare, business owners should assess the potential financial risk a cyber-attack poses and forecast cash flow to ensure their business can survive one. It could also be beneficial to value your data assets to estimate the worth of any lost revenue and recovery expenses. Business owners may also want to keep offline playbooks. These are secure, printed offline copies of critical financial contacts, account numbers and recovery protocols to ensure that your business has key information in the event of a cyber-attack. Additionally, your business should establish strict double-check procedures for unusual payment requests or changes to supplier details to prevent business email compromise. You should also factor cyber insurance premiums into your operational risk management to ensure that you are prepared for any eventuality. What should you do to get your finances back in check after a cyber-attack? Should the worst-case scenario happen, once you are back on track, the first thing you should do is speak with your accountant. Your accountant will help you to calculate the exact monetary value of damaged assets, lost revenue and stolen money so that you know exactly where your business stands. They will then review your financial data and your tax records to establish a baseline for recovery and determine if the business can continue or if restructuring is necessary. Accountants can also help during complex cyber insurance claims by submitting the required evidence to ensure fair financial assessments of the business interruption costs. Once you have received any insurance payments, an accountant can advise on the tax implications.  How can we help? Cyber-attacks are becoming more prevalent for businesses up and down the UK. That is why it is imperative that you receive advice on how you can best prepare your finances in a worst-case scenario. Our team of accountants can help you to prepare your business for a cyber-attack and in the event of a cyber-attack, we can help you pick up the financial pieces. Get in touch with our team for support with preparing your business for a cyber-attack.

Borrowing amongst SMEs is on the rise – preparing your business for finance

By Charlie Flockhart • October 5, 2026
According to UK Finance, gross lending to SMEs from the main high street banks reached £5.35 billion in the second quarter of 2026, the highest quarterly level recorded since the pandemic. Real estate and professional service firms drove much of this growth, while manufacturers and hospitality businesses borrowed less. How can loans help SMEs? A loan can often be a lifeline for SMEs in a financial rough patch. It can help a business bridge cash flow gaps in the short term, ensuring that it has enough money to cover payroll, rent and supplier obligations. It could also be the case that a loan can help to fund expansion to increase business opportunities or hire more staff. Additionally, loans can help business owners to retain ownership of the company rather than selling equity to investors. However, SMEs need to remember that a loan must be paid back with interest regardless of business performance. How should SMEs prepare for a loan? Preparing your business for a loan can often be a tricky process. First, you will need to gather two to three years of profit and loss statements alongside cash flow forecasts and up-to-date tax filings. Next, you will have to check and correct any errors that may be on your personal or business credit reports in order to optimise your credit profile before borrowing. You will then have to create a strong business plan outlining your core growth strategy and market opportunity. There should be a clear breakdown of how the funds will be used, linking every borrowed pound to revenue generation, as well as a risk mitigation section addressing potential economic downturns. You must consider the lender that you are selecting by comparing criteria across high street banks and alternative providers.  How can an accountant help? An accountant can be one of your most valuable assets when applying for finance. They can help to improve your financial record-keeping, build advanced financial models and stress-test your cash flow to give lenders greater confidence in your business. We understand that it is tough for SMEs to obtain funding at the moment. That is why our team can help you obtain the loan that you need. For support with accessing loans, get in touch with our team.

Medium-sized companies may qualify for audit exemption

By Charlie Flockhart • October 5, 2026
The Department for Business, Innovation, Science and Trade (DBIST) initiated a ‘modernising corporate reporting’ consultation on 7 September 2026, which closes on 30 November 2026. Under the proposed overhauls, many medium-sized companies may be exempt from mandatory audits. This consultation forms part of a wider Government pledge to cut administrative burdens on businesses by 25 per cent by 2029. What is being proposed? The Companies Act 2006 considers various company size categories to assess which reporting, audit and disclosure requirements apply. For medium-sized businesses wanting to access exemptions currently exclusive to small companies, they must not exceed two of the following three thresholds: Turnover of £54 million Balance sheet total of £27 million Average of 250 employees Under these exemptions, many businesses would no longer need to have an audit, provide cash flow statements or prepare consolidated accounts. Elsewhere, the proposals from DBIST include: Introducing an SME accounting standard Allowing companies to calculate employee numbers on a full-time equivalent basis Removing strategic report requirements for most medium-sized private companies Simplifying financial reporting rules Is it always smart to forgo an audit? While the proposals mean audits may become optional for some SMEs, forgoing an audit isn’t always the smartest move. An audit can often go one step further than simple compliance and financial reporting, providing insights and peace of mind that your numbers are accurate. Lenders also often rely on audited accounts when deciding how much to lend and at which interest rate. Likewise, when it comes to selling a business, buyers and investors often look at audited figures when conducting due diligence as they offer greater credibility. For any businesses mulling the exemption, it is important to evaluate long-term plans and whether spending money on an audit could have benefits. At the moment, these changes are part of an ongoing consultation and so may be subject to change in future. We will bring you further updates as they emerge. Speak to an accountant to evaluate whether an audit may be beneficial to your business.