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.

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