Accounting Changes in April 2025 Your Guide to the 2025/26 Tax Year

The 2025/26 tax year kicks off on 6 April 2025, and with it comes a series of changes that could impact individuals, businesses, and employers alike. Whether it’s shifts in employer National Insurance, tweaks to Capital Gains Tax, or evolving compliance obligations from Companies House and HMRC, staying informed is key.

At Ascentis Accountants, we’ve summarised the most important updates below to help you plan ahead with confidence.

1. Income Tax Bands & Personal Allowance

No changes have been made to personal tax thresholds in England, Wales or Northern Ireland for 2025/26. The current freeze continues:

• Personal allowance: £12,570

• Basic rate (20%): £12,571 – £50,270

• Higher rate (40%): £50,271 – £125,140

• Additional rate (45%): Over £125,140

This prolonged threshold freeze continues to create “fiscal drag”, with more people pushed into higher tax bands as wages rise. For directors and higher earners, efficient planning around salaries, dividends, and pensions is increasingly important.

Note: Scotland has different income tax rates and bands. Please speak to us for tailored advice.

2. National Insurance: What’s Staying the Same

Unlike previous years, no further changes to Class 1 or Class 4 National Insurance Contributions (NICs) have been announced for April 2025:

• Class 1 NICs (Employees): 8%

• Class 4 NICs (Self-employed): 6%

The abolition of Class 2 NICs remains in effect, providing a small simplification for sole traders, but overall rates are now stable for 2025/26.

3. Employer NICs: Significant Changes from April 2025

Employers will be affected by several changes announced in the Spring Budget:

• Employer NIC rate will rise from 13.8% to 15%

• The threshold for paying Employer NICs will reduce from £9,100 to £5,000 per employee

• The Employment Allowance will increase from £5,000 to £10,500

These changes will increase employment costs for many businesses, especially those with multiple part-time or lower-paid staff. If your business is growing or employing for the first time, it’s essential to factor in these revised thresholds.

4. Dividend Allowance Unchanged

The tax-free dividend allowance remains at £500 for 2025/26, having been halved in April 2024.

Dividend tax rates are still:

• 8.75% for basic rate taxpayers

• 33.75% for higher rate taxpayers

• 39.35% for additional rate taxpayers

Company directors relying on dividend income should continue to review their remuneration strategies, especially in light of frozen income tax thresholds.

5. Capital Gains Tax: Rate Increase

From 29 October 2024, new Capital Gains Tax (CGT) rates apply:

• Basic rate taxpayers: now 18% (up from 10%)

• Higher/additional rate taxpayers: now 24% (up from 20%)

• Residential property gains: remain at 18% / 28%

The annual CGT allowance remains at £3,000, continuing the trend of significantly reduced exemptions in recent years.

If you’re considering disposing of assets, timing and structuring your sale is more important than ever.

6. Companies House: Major Filing & Compliance Updates

Changes from the Economic Crime and Corporate Transparency Act are coming into force in phases throughout 2025. Key measures include:

Identity Verification

All company directors, PSCs (People with Significant Control), and individuals filing on behalf of companies must undergo identity verification.

Registered Email Address

Companies must now provide a registered email address to Companies House. This will be used for official communications.

iXBRL Filing for Small Companies

Digital accounts must be submitted in structured iXBRL format going forward, including for micro and small entities. Paper filings and PDFs will no longer be accepted.

If you operate a limited company or LLP, now is the time to review your records and ensure you’re prepared for digital compliance.

7. Making Tax Digital: Get Ready Now

Although Making Tax Digital for Income Tax (MTD for ITSA) doesn’t officially launch until April 2026, the 2025/26 tax year is your last full year to prepare.

Who will be affected first?

• Self-employed individuals and landlords earning over £50,000

• Quarterly digital submissions to HMRC will be mandatory
  

At Ascentis, we recommend getting familiar now with cloud-based software like Xero and FreeAgent – both MTD-compatible and designed to make submissions smoother.

8. VAT Threshold Increase

From 1 April 2025, the VAT registration threshold increases to:

• £90,000 (from £85,000)

• De-registration threshold increases to £88,000

This change is good news for small businesses approaching the threshold, potentially delaying VAT registration and easing administrative burdens.

9. Pensions & Savings

State Pension

The full new state pension increases by 8.5% in April 2025, rising to around £233.10 per week.

Pension Contributions

• Annual Allowance remains at £60,000

• The Lifetime Allowance has been abolished as previously announced, making large contributions more viable for higher earners

If you’re planning to contribute to your pension this year, it’s worth discussing the most tax-efficient route with your adviser.

10. Key Dates for the 2025/26 Tax Year

Final Thoughts: Time to Plan Ahead

The 2025/26 tax year brings a mix of continuity and change — with big implications for employers, directors, and business owners. At Ascentis, we specialise in proactive tax planning and compliance support, helping our clients stay one step ahead.

Whether you need help budgeting for the new Employer NIC rules, adapting to digital reporting, or reviewing your personal tax strategy — our team is ready to support you.

Get in touch with us today to make the most of the year ahead.