Eight major tax changes are set to impact Britons’ finances in 2025 and beyond, affecting everything from property purchases to alcohol prices.
The changes, some of which were confirmed in the Budget, include significant adjustments to National Insurance, stamp duty thresholds, and car tax rates.
Local authorities will also have the power to increase council tax bills, while changes to capital gains tax (CGT) and alcohol duty will affect consumers across the country. These modifications come alongside continued freezes to income tax thresholds until 2028 and inheritance tax (IHT) thresholds until 2030.
Employers will face increased National Insurance costs from April 6, 2025, with rates rising from 13.8 per cent to 15 per cent. The earnings threshold at which employers start paying this tax will drop significantly from £9,100 per year to £5,000.
While these changes won’t directly impact workers’ take-home pay, businesses have warned they may need to raise prices for customers to offset the increased costs.
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Big tax changes are coming in 2025 and beyond
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Stamp duty thresholds in England and Northern Ireland are set to decrease from April 2025, affecting property purchases across both nations.
The current threshold of £250,000 for paying stamp duty on a primary residence will revert to its previous level of £125,000.
First-time buyers will also be impacted, with their stamp duty threshold dropping significantly from £425,000 to £300,000.
These changes mark the end of temporary measures introduced in September 2022, meaning more property purchases will become subject to stamp duty charges.
Britons are preparing for drastic changes to inheritance tax rules
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The adjustments will result in homebuyers paying tax on a larger portion of their property’s value than under current rules.
Council tax is set to rise again in April 2025, with local authorities in England permitted to increase bills by up to five per cent.
The average band D council tax in England for 2024/25 was £2,171, according to government figures. Significant changes to car tax rates will also take effect next April, particularly affecting new vehicle purchases.
New cars emitting between 1-50 g/km of CO2, including hybrids, will see tax rise from £10 to £110. Vehicles emitting 51-75g/km of CO2 will face increases from £30 to £130, while rates for cars emitting 76g/km and above will double.
Cars emitting over 255g/km of CO2 will see first-year rates double from £2,745 to £5,490. Even low-emission vehicles currently exempt from car tax will begin paying £20.
Alcohol duty rates on non-draught products including wine, spirits and bottled beer will increase by 2.7 per cent from February 1, 2025. However, duty on draught alcohol served in pubs, bars and restaurants will decrease by 1.7 per cent
CGT has risen from 10 per cent to 18 per cent for basic rate taxpayers, and from 20 per cent to 24 per cent for higher and additional rate taxpayers.
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Under the current freeze to tax allowance threshold, the personal allowance will stay at £12,570 before tax begins, with the National Insurance employee threshold also remaining frozen.
The main IHT threshold will remain frozen at £325,000 until 2030. The additional rate for passing on property will stay at £175,000, while the annual gift allowance remains fixed at £3,000.
A significant change will occur from April 2027, when pensions will be included as part of the taxable estate.
These continued freezes to Inheritance Tax thresholds represent one of the longer-term tax measures affecting British families in the coming years.