In the coming month, businesses face a variety of changes to their tax rates, which will in turn have an impact on the day-to-day costs of their business. In this article, our Business Recovery and Restructuring team discuss the tax changes that business owners should be aware of and how they can best prepare for them.
What changes do I need to be aware of?
There are several changes that will come into effect during April this year. The most important ones to be aware of include:
- Employer National Insurance Contributions (NICs) – NICs will rise from 13.8% to 15%, and the secondary threshold for employer NICs will decrease from £9,000 to £5,000
- Business Asset Disposal Relief (BADR) – The current 10% rate of BADR will increase to 14% from April 2025 to 18% by April 2026
- Capital Gains Tax (CGT) – The basic rate of CGT will rise from 10% to 18% and the higher rate will increase from 20% to 24%
- National Minimum Wage (NMW) – As of 1st April, NMW will be £12.21 per hour for over 21s. You can read a full breakdown of the changes in NMW in our article
Rental businesses will also be affected by the changes to the Furnished Holiday Lettings (FHL) regime, which will potentially increase tax liabilities for property owners. For more information on FHL and how these changes could affect your business, you can read our case study on claiming tax relief from an FHL here.
Useful steps businesses can take to prepare for April 2025 tax changes
Whilst these changes are now in place, there are still ways business owners can prepare for the financial impact of them. An essential consideration will be to ensure that you are aware of your business’ ongoing cashflow and working capital requirements:
- In-depth financial assessment – Carrying out an in-depth financial assessment into the cashflow requirements of your business, and considering the regular costs incurred, will enable business owners to see areas in which they can save money and areas of the business which could be targeted to help drive revenue growth
- Financial forecasts– When preparing financial projections, it is important to account for the increases to NICs and wage expenses to prevent unexpected extra costs, and help you understand working capital requirements to ensure your business is able to maintain the payment of its liabilities, as and when they fall due
To develop a financial plan with these changes in mind, there are some questions business owners could consider to make the process easier.
Cost control: Are there any areas in which expenses can be reduced without compromising the quality of goods/services?
Process optimisation: Is the business working at maximum productivity or are there better working practices that can be adopted to enhance productivity? You may need to consider whether any investment is required to adopt more efficient working systems.
Training and development: Could now be the right time to invest in the skills of employees to help improve efficiency?
We can help you navigate these changes
Our team of Business Recovery and Restructuring experts have a wealth of knowledge across a variety of sectors and industries. If you or your business is struggling, the sooner you seek assistance the better. Get in touch with a member of our team today to see how we can help.
