Employers NIC
Employers NIC has been increased from 13.8% to 15% from 06/04/2025. This rate will apply to Salaries and benefits. In addition, the Employers secondary threshold has been reduced from £175 per week to £96 per week. To offset the impact of this measure on Smaller/Micro enterprises, the Employers NIC exemption allowance has been increased from £5,000 to £10,500 per annum. Along with the projected increase in the nation minimum wage to £12.21 per week from April 2025, employers will need to assess how these costs are absorbed/borne or passed on next year to remain within budgets. Owner managed businesses will need to reconsider how they structure profit extraction from April 2025.
Capital Gains Tax
The basic rate after the £3,000 exemption will increase from 10% to 18% for disposals after 30/10/24 (excluding residential properties and carried interest) and if the higher rate threshold is exceeded, the rate will increase from 18% to 24%.
Business Asset Disposal Relief (BADR)
The base exemption of £1M remains but above that amount the tax rate will increase from 10% in the 24/25 tax year to 14% in the 25/26 tax year and 18% in the 26/27 tax year. Business owners considering future business sales/retirement may wish to factor in these increases into the timing of their business disposals. These considerations will also apply to Business Owners considering Members Voluntary Liquidation routes to extract accumulated business profits on closure.
Non Domiciled Tax Reliefs
This relief is abolished after 06/04/2025, so affected persons should consider the future impact of the appliance of UK income tax, Capital Gains and Inheritance Tax on their worldwide assets and take appropriate action to mitigate the impact of this change.
Unused Pension Funds and Death benefits
These funds will be brought into taxable estates from 06/04/2027, so consideration should be given to use of the 25% tax free lump sum extraction (maximum relief £268,275) hilst this relief is still available.
Inheritance Tax
With the current frozen exemptions for the next few years, consideration should be given to use of the lifetime gifts exemptions to the maximum allowed each year plus gifting away surplus income where possible.
If you would like further advice on the above areas, we have detailed help sheets, available to clients, and we are always available to discuss tax saving matters with you. Please call us on 01189787561 or contact us by email on alanreynoldsco@aol.com