Tax changes for 2025/26: what you need to know

‘April is the cruellest month,’ wrote T.S. Eliot at the beginning of his famous poem, The Wasteland. I’m no literary critic, but I wouldn’t be surprised if he were thinking about the new tax year. Almost every April, we seem to face negative tax changes – and 2025/26 is no exception.

To help you understand what to expect, we’ve summarised the key tax changes for this financial year below.

Employer National Insurance

While the Labour government promised not to increase National Insurance for workers, it has slapped an increase on employers. This means the Employer National Insurance rate has now jumped from 13.8% to 15%. In addition, Employer NI now kicks at when an employee earns £5,000. It used to be £9,100.

These changes will push up employment costs, as will the new National Living Wage and National Minimum Wage rates that have just come into force. However, it’s worth noting that changes to the Employment Allowance will allow certain employers to reduce their NI liability by up to £10,500. This will benefit smaller employers the most.

Tax changes to furnished holiday lets

The tax regime that applies to furnished holiday lets has been brought in line with normal, long-term tenancies. This makes them a less attractive investment. You can learn more about these tax changes here.

Stamp Duty increases

The Stamp Duty holiday – a temporary cut to nil-rate thresholds – has ended. Stamp Duty Land Tax rates have now increased. If you buy a second home or a rental property, the SDLT surcharge has now gone up from 3% to 5%. You can find out more in our article on Changes for landlords in 2025.

Council Tax changes

Cash strapped local authorities have pushed up council tax rates for the 2025/26 tax year. In England, bills rose by an average of 5%.

HMRC late payment interest rates

On 6th April 2025, HMRC increased its late payment interest rate by 1.5%. Late payment interest was charged at base rate plus 2.5%. This is now set at base rate plus 4%. You can find more details about this change here.

Non-dom tax changes

There is now a new non-dom tax regime. This is called the Foreign Income and Gains (FIG) regime. It is open to people who become UK tax resident after 10 consecutive years of not being so. Qualifying people won’t have to pay tax on foreign income or gains for the first four years they are UK tax resident. You can find out more here.

Double cab pick-up tax changes

This is one of the oddest tax changes. It is essentially about how to classify a double cab pick-up truck for tax purposes. In a nutshell, if the vehicle has a single row of no more than three seats, it’s classified as a van for purposes of Corporation Tax and capital allowances. A pickup with more than one row of seats and a payload of 1 tonne or more is classified as a car. This makes them more expensive for businesses.

Business Asset Disposal Relief

Business Asset Disposal Relief (BADR) allows you to reduce the amount of Capital Gains Tax you pay after disposing of qualifying business assets. The rate of CGT that applies to BADR rose from 10% to 14% on 6th April 2025. It will increase to 18% on 6th April 2026.

As we’ve seen, there are plenty of tax changes that have come into force for the 2025/26 tax year. As to whether there will be tax increases at the next Budget, we’ll be keeping a close eye out for you. In the meantime, if you’re a THP client and would like to learn more about any of the above tax changes, please speak to your account manager.