How Small Businesses Can Handle the 2025 Tax Changes

Business Owners – Are You Ready for the 2025 Tax Shake-Up?

April 2025 brings major tax changes that could increase costs for businesses. Here’s what you need to know and how to prepare:

1. Corporation Tax – What’s Changed?

If your profits are over £50,000, you may be paying a higher rate of Corporation Tax (up to 25%). However, you can reduce your tax bill by making full use of capital allowances, such as:

• Annual Investment Allowance (AIA) – claim up to £1 million in qualifying capital expenditure.

• Full Expensing – allows companies to write off 100% of investment in qualifying plant and machinery.

2. National Insurance Costs Are Rising

Employer NI rates are increasing from 13.8% to 15%. If you have staff, your wage bill just got more expensive.

✅Consider salary sacrifice schemes to offset some of the costs.

✅Take advantage of the new Employment Allowance, which is increasing to £10,500.

3. Business Motoring – Act Before April 2025

Changes to the tax treatment of double cab pick-ups (DCPUs) mean they will be taxed as cars instead of commercial vehicles. This affects:

• Benefit-in-kind tax – expect a higher tax bill if you provide a DCPU to employees.

• Capital allowances – reduced tax relief on new vehicle purchases.

4. Investing in Green Technology

Tax incentives for electric vehicles and energy-efficient equipment remain available. If you plan to upgrade, act now to maximise tax savings.

The 2025 tax shake-up brings both challenges and opportunities for business owners. With higher Corporation Tax rates, increased National Insurance costs, and tighter rules on company vehicles, it’s more important than ever to plan ahead. By understanding the changes and making smart decisions, like leveraging capital allowances, exploring salary sacrifice options, and investing in green tech – you can stay compliant, manage your costs, and even turn the new rules to your advantage.