25th January 2025

Understanding the New Tax Year Changes: What Businesses Need to Know for 2025

As we approach the end of January, businesses across England are already preparing for the upcoming tax year changes effective from April 6, 2025. Staying ahead of these updates is crucial for maintaining compliance and optimizing your financial strategy. Here’s a look at some key developments on the horizon and their potential impact on your business.

1. The Corporation Tax Landscape

The staggered corporation tax changes introduced last year remain in effect. Businesses with profits exceeding £250,000 continue to pay the higher rate of 25%, while smaller enterprises enjoy a marginal rate. Ensuring your profit levels are accurately forecasted can help you plan for the tax implications effectively.

2. Making Tax Digital (MTD) Expansion

HMRC is pushing forward with the Making Tax Digital initiative. From 2025, businesses earning more than £30,000 annually must comply with MTD for Income Tax Self Assessment. This expansion affects sole traders, landlords, and smaller companies, emphasizing the importance of digital record-keeping.

If you’re not already using software compatible with MTD, now is the time to transition. This not only ensures compliance but also streamlines your accounting processes.

3. Energy Bill Relief Scheme Updates

For small and medium-sized enterprises (SMEs), energy costs remain a pressing concern. The government’s Energy Bills Discount Scheme will continue until March 2026 but with reduced levels of support. Reviewing energy efficiency within your business could lead to cost savings and align with sustainability goals.

4. Employment Tax Considerations

National Minimum Wage rates will increase in April, impacting payroll costs. The current trend toward enhanced employee benefits, such as flexible working arrangements and wellbeing initiatives, means businesses must budget for these changes carefully.

5. R&D Tax Relief Reform

Changes to Research and Development (R&D) tax relief will take effect this April, impacting how SMEs and larger businesses claim. Enhanced credits for certain R&D activities in priority sectors, such as technology and sustainability, are set to reward innovation.

How Can Accountants Help?

Navigating these updates can be complex, but working with an accountant ensures you’re well-prepared. From tax planning to compliance support, professional advice can save time and money while keeping your business future-proof.

Take Action Today

As always, preparation is key. Whether you’re updating payroll systems for the new wage rates or transitioning to digital accounting for MTD compliance, now is the time to act. Get in touch with us for expert guidance tailored to your business needs.