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.

The hidden savings tax trap and why changes to ISAs make it harder to put money away

By Charlie Flockhart • June 4, 2026
Do you know what your Personal Savings Allowance is? While most taxpayers in the UK will know the thresholds for Income Tax, a worrying few know the way in which personal savings can be subject to tax. With ISAs set for a significant overhaul, understanding the less tax-efficient saving options will soon be more important. How much tax do you pay on your savings? While your savings are not taxed, any interest generated by those savings could be subject to tax if it exceeds your Personal Savings Allowance. Depending on the rate of Income Tax you pay, your Personal Savings Allowance will differ. The thresholds are: £1,000 for Basic-rate taxpayers £500 for Higher-rate taxpayers £0 for Additional-rate taxpayers ISAs remain the more tax-efficient saving strategy as the interest generated from them is tax-free. It is therefore most effective to utilise the full £20,000 saving limit for an ISA as early in the tax year as possible to benefit the most from the accumulation of interest. How should tax on savings be managed? The main issue is that tax on savings is often overlooked, resulting in HMRC taking action for underpaid taxes. This will often manifest in a charge through PAYE, as employees are more likely to overlook this obligation. Those filing Self Assessment tax returns should already be declaring interest earned, so any compliance issue in that group points to a wider problem with handling tax obligations. When attempting to make the most of saving strategies, it is best to seek professional financial advice. This will be more important if the saving limit for Cash ISAs falls to £12,000 for under-65s in 2027 as proposed, leaving younger savers to have to find new ways to grow their wealth. Our professional team can help you to determine an effective saving strategy that suits your financial goals while helping you to be mindful of the tax obligations that you may face. We do not want to see anyone caught off-guard by an unexpected tax bill and understanding your exposure is vital for preventing this. Get in touch with our team to regain confidence in your saving strategy.

Salary sacrifice cap and the squeezed middle

By Charlie Flockhart • June 4, 2026
The £2,000 cap on National Insurance (NI) free salary sacrifice pension contributions was sold as a tax on high earners but, if you look closer, the opposite is true. In fact, the people most exposed are middle-income savers and the small businesses that employ them. For the so-called “squeezed middle”, it is yet another quiet hit to take. Why do the rules adversely affect middle-earners? From April 2029, salary sacrifice tax relief will continue to be available, but only the first £2,000 of employee pension contributions each year will be free of NI. Anything above that becomes liable to NI for both the employee and the employer and the full adverse effect is clear once the different rates of NI are accounted for. If a person’s total pension contributions are modest, say up to six per cent, those individuals who earn between £35,000 and £50,270 will pay an eight per cent NI charge on pension contributions above the £2,000 cap. By contrast, an individual whose earnings already exceed the upper earnings limit of £50,270 will pay employee NI at just two per cent on those same excess contributions. This imbalance in the NI system means that those on lower incomes could pay four times the NI rate on their pension savings in excess of the new threshold than the highest earners pay. How does this change affect employers’ National Insurance bills? Many employers currently share their own NI savings by topping up staff pensions, but a new 15 per cent employer NI charge on contributions above the cap makes those top-ups unaffordable for a lot of firms. As a result, some employees could see the overall efficiency of their pension saving above the cap fall by as much as 23 per cent once lost top-ups are counted. Even those who stay below the threshold are not safe, as the Office for Budget Responsibility (OBR) estimates that around 76 per cent of higher employer costs are eventually passed back to staff through weaker pay rises and trimmed benefits. Don’t wait for the change The good news is that there is time to plan, as the rules do not take effect until April 2029, which leaves room to act while current allowances still apply. If you are a middle earner, this is exactly the moment to review your pension strategy, weigh up complementary options such as ISAs and make sure your retirement plans stay on track. To talk through what the salary sacrifice cap means for you, please get in touch with our team.

Government summer savings spree adds complexity to VAT for hospitality and tourism

By Charlie Flockhart • June 4, 2026
When Rachel Reeves announced a temporary cut in VAT from 20 per cent to five per cent for family attractions and children’s dining over the summer holidays, the hospitality and leisure sectors broadly welcomed it. The scheme runs from 25 June to 1 September and is funded, according to the Treasury, by closing a tax loophole used by oil and gas companies with overseas operations. On the surface, this looks like good news worth welcoming. However, for the businesses applying the new rules, the reality of delivering the rate cut is more complicated than the headlines suggest. The rules shift from one service to the next How the cut works depends heavily on what is being sold. Admission tickets to amusement parks, water parks, zoos, museums, soft play and similar venues qualify, as do children’s and family tickets to cinemas, theatres and concerts. However, pay-per-ride attractions do not. Children’s meals only qualify when served from a clearly marketed, separate children’s menu. A smaller portion of an adult dish does not count, nor does a discounted adult meal or a takeaway. Season tickets and annual passes are generally excluded too. The result is that many businesses will apply two VAT rates at once on the same bill. Tills, accounting systems and front-of-house staff all need to handle that from day one, then revert again from 1 September. This adds an additional layer of complexity to VAT reporting that businesses need to consider right away. Encouraged, but not required The Government has urged businesses to pass the saving on to customers and the Competition and Markets Authority has new anti-profiteering powers to prevent unethical activity. Even so, there is no legal obligation to lower prices at the till and many businesses will weigh up rebuilding margin, reinvesting and matching competitors before deciding exactly what savings to offer to consumers. Given the wider cost challenges that businesses currently face, the scheme may not deliver the lift at the till that many customers are expecting. Right idea, wrong season? There is also a question of timing. The scheme targets the period when families already spend most on days out and when operators are near capacity. A cut would arguably do more for businesses in the quieter autumn and winter months. As designed, it looks more like household support than business stimulus. Any support for the sector is welcome, provided businesses seek the expert guidance required to manage obligations and make the most of any new opportunities. If you would like to discuss what the temporary VAT cut means for your business, please get in touch with our team.