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Outlook for 2025: stevensdrake Solicitors’ New Year advice for businesses and Individuals

Posted
January 13, 2025

Now that the dust has settled after the 2024 Autumn Budget, we’re reflecting on what the announcements mean for businesses and individuals as we head into 2025. Below, we provide an overview of the key changes, their implications, and how to navigate them effectively.

For Businesses: Navigating Tax and Payroll Challenges

1. Capital Gains Tax (CGT) Changes – Time to reassess exit strategies

Small business owners, particularly those nearing retirement, should be mindful of the increase in CGT rates. As of April 2025, the lower rate rises to 18% (from 10%) and the higher rate to 24% (from 20%). These changes also apply to Business Asset Disposal Relief (BADR), which will gradually increase to 14% by April 2026.

If you’re planning to sell your business, it may be worth exploring tax-efficient exit strategies before these changes take full effect. Options to consider include:

  • Phased Exits: Spreading the sale over multiple tax years to optimise allowances.
  • Family Transfers: Gifting or selling shares to family members, which may benefit from reduced tax rates.
  • Holding Structures: Using tax-efficient vehicles such as trusts or ISAs to shield gains.

2. Stability in Corporate Taxation – Encouraging long-term planning

The Corporate Tax Roadmap published in October 2024 aims to bring stability to the system. Key policies, such as the 25% headline tax rate, substantial shareholding exemption, and full expensing for capital investment, will remain. Smaller businesses will also benefit from the continuation of the Small Profits Rate at 19%. This consistency should encourage businesses to plan longer-term investments confidently. If you’re considering capital investment, now is the time to act, as full expensing may not remain indefinitely.

3. Personal CGT Allowances – Plan ahead

Personal CGT allowances have significantly reduced in recent years, from £12,300 in 2022/23 to just £3,000 for the current tax year. If you’re planning to dispose of assets, it’s crucial to take advice on timing and structure to mitigate your liabilities. Using tax wrappers like ISAs and pensions can help shield investments from both CGT and income tax. Small business owners should also consider the impact of these changes alongside the rising CGT rates announced for 2025. Exploring phased exits, family transfers, or holding structures, as outlined above, can provide opportunities to optimise your financial outcomes.

Our Corporate & Commercial team can provide tailored advice to maximise your returns while minimising your tax liability.

4. National Insurance and Minimum Wage Increases – Budgeting for rising costs

From April 2025, employers’ National Insurance Contributions (NICs) will increase by 1.2 percentage points. Coupled with the rise in the National Minimum Wage, businesses will need to factor in higher payroll costs. Small businesses may find some relief through the doubling of the Employment Allowance, which helps reduce NIC liabilities.

To manage cash flow effectively, you might want to consider:

  • Workforce Optimisation: Reviewing staff hours, roles, and salaries to align with profitability.
  • Technology Investments: Using automation to streamline operations and reduce manual costs.
  • Employee Engagement: Retaining staff through non-monetary benefits, such as flexible working or professional development opportunities.

With further developments under the Employment Rights Bills being rolled out over 2025, we advise you to keep up to date with all the latest changes so that you can ensure you are compliant and also, proactively manage any changes. For up-to-date employment advice and insights, sign up for our monthly employment update here. 

For Individuals: Preparing for tax and property changes

1. Inheritance Tax (IHT) on Pensions – Changes coming in 2027

From April 2027, IHT rules on pension funds will change, potentially affecting your beneficiaries. Pensions held in trust may be subject to a 40% tax charge, and withdrawals after age 75 will also attract higher taxes.

We recommend:

  • Updating Wills and Trusts: Ensure they reflect the new IHT rules.
  • Exploring Lifetime Transfers: Reduce potential liabilities by gifting assets during your lifetime.

Our private client team are on hand to offer advice on IHT and making your will. 

2. Stamp Duty Land Tax (SDLT) – Act now if you’re planning on moving

If you are considering property purchases, be aware of upcoming changes to SDLT rates from April 2025. Currently, there is no SDLT payable up to £250,000, and first-time buyers benefit from reliefs up to £425,000. From April 2025, these bands will decrease, and higher rates will apply.

  • The nil rate threshold which is currently £250,000 will return to the previous level of £125,000.
  • The nil rate threshold for first-time buyers which is currently £425,000 will return to the previous level of £300,000.
  • The maximum purchase price for which First-Time Buyers Relief be claimed is currently £625,000 and will return to the previous level of £500,000.

If you’re planning to move, acting before the April deadline could save thousands in taxes. Contact our Residential Conveyancing team for expert guidance to ensure a smooth transaction.

Final Thoughts: A time for proactive planning

Whether you’re a business owner facing rising costs or an individual navigating tax changes, the key to thriving in 2025 is proactive planning. At stevensdrake Solicitors, we’re here to help you understand the new rules, optimise your financial strategies, and seize opportunities despite the challenges.

Contact us today to discuss your situation and ensure you’re prepared for what lies ahead.

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