April 2025 tax changes: a round-up for small business

As every small business owner will know, April 2025 is a big month. Not only is it the start of the new tax year, but most of the tax changes announced in the Autumn Budget 2024 come into effect this month.

Anyone with employees will be particularly affected by the changes, which will see an increase in the cost of staff to employers. Additionally, the retail, leisure and hospitality sector will be impacted by a reduction in business rate relief, and anyone who uses commercial vehicles should also take note: vehicle excise duty is increasing; and double cab pick ups are now reclassified for tax purposes. 

Here are all the tax changes that are coming your way from the beginning of April 2025.  

Cost of employing staff

While many of the below changes will increase the cost to business of employing staff, they come alongside an increase in Employment Allowance, designed to offset these payroll costs. 

From Tuesday 1st April 2025

• National Minimum Wage rates increase for all, including the National Living Wage, which rises by 6.7% to £12.21 an hour for people aged 21 and over.

From Sunday 6th April 2025 

• Employer’s National Insurance Contributions (NICs) increase by 1.2%, from 13.8% to 15%. At the same time, the threshold at which employers must start paying NICs reduces from £9,100 to £5,000 per employee.

• Employment Allowance increases from £5,000 to £10,500. This means that the amount by which eligible employers will be able to reduce their National Insurance liability will more than double. 

• Statutory Sick Pay increases to £118.75 per week (up from £116.75).

• Statutory family-related pay increases. The amount of statutory maternity, paternity, adoption, shared parental leave and parental bereavement pay increases to £187.18 per week (up from £184.30).

• The Neonatal Care (Pay and Leave) Act comes into force. This means eligible parents will be entitled to up to 12 weeks’ paid leave.

Other tax changes to note

As well as the increased cost of employing staff in the 2025/26 tax year, certain businesses will be impacted by additional tax changes. 

The below changes are pertinent to the retail, leisure and hospitality sector, businesses with commercial vehicles, and anyone planning on disposing of business assets.

From Tuesday 1st April 2025

• Business rates relief reduces from 75% to 40% for the retail, leisure and hospitality industries, up to a cap of £11,000 per business. 

• Double cab pick-up trucks with a payload capacity of one tonne or more will be classified as cars for certain tax purposes. This comes into effect from Tuesday 1st April 2025 for Corporation Tax, and Sunday 6th April 2025 for income tax. Find out more here.

• Vehicle excise duty increases for all vehicles. Businesses with fleets or a significant number of high-emission vehicles will be most affected by this increased cost. 

From Sunday 6th April 2025

• Business Asset Disposal Relief increases from 10% to 14%. This means that gains made through business asset disposals in the 2025/26 tax year will be subject to a higher rate of tax. The rate will increase further, to 18%, next April.   

If you need finance to help your small business in 2025, you can apply for a loan or line of credit in minutes. Check if you’re eligible today.

13/03/25: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.