By Maz Davis | 6 May, 2025

Saul Fairholm Guide: Navigating the Key UK Tax Changes in 2025

As the 2025/26 tax year gets underway, individuals and businesses are already feeling the effects of a series of fiscal reforms that will shape financial planning in the months ahead. At Saul Fairholm, we understand that behind every policy shift lies a personal or commercial impact. This guide outlines the confirmed tax changes now in effect and offers practical insights into what they mean for our clients. It also poses an important question: are you adequately prepared, or is it time to seek expert advice?

Personal Tax Changes

1. Capital Gains Tax: Rates Climb, Exemptions Static

From April 2025, the Capital Gains Tax (CGT) rate for basic rate taxpayers has risen to 18%, and for higher/additional rate taxpayers to 24%. These increases apply to most asset disposals other than residential property, which remains at a higher rate.

This change narrows post-tax returns for investors and property owners alike. If you’re considering selling a second home, shares, or your stake in a business, it’s worth asking: have you fully calculated your tax exposure? Business owners planning to exit must now carefully model the after-tax impact of any sale, taking advantage of reliefs like Business Asset Disposal Relief (BADR) where still available.

You might consider staggering disposals across tax years or using spousal exemptions to minimise tax. But timing, valuation, and deal structure now matter more than ever.

2. Stamp Duty Land Tax: Thresholds Revert, Costs Rise

As of 1st April 2025, the Stamp Duty Land Tax (SDLT) nil-rate threshold fell back to £125,000, with first-time buyer relief capped at £300,000. Buyers at all levels now face higher up-front tax costs.

Beyond simply budgeting for more tax, this could influence the type and location of properties buyers pursue. Developers and landlords should revisit their return-on-investment models. For those on the fence about investing in property especially with thin margins, this change could be the deciding factor. Do your plans still stack up under the revised rules?

3. Inheritance Tax: Pensions Brought into Scope

From April 2027, unused pensions will be counted toward an individual’s estate for Inheritance Tax (IHT) purposes. This marks a major shift from the current approach, where defined contribution pensions are typically excluded.

Pensions have long been seen as a tax-efficient estate planning tool, but that assumption is changing. Should your estate plan now include strategies to draw down or reposition pension assets? If you’re a high-net-worth individual, now is the time to model potential exposure and consider alternatives such as trust arrangements or earlier gifting strategies.

4. Alcohol, Car, and Council Tax: Cost of Living Pressures

Alcohol duty, Vehicle Excise Duty, and council tax are all increasing. These may appear marginal in isolation, but collectively they squeeze household budgets and increase operational costs for affected industries.

If you’re in the hospitality or logistics sectors, these pressures can’t be ignored. Margins may need revisiting, and pricing structures adjusted. For individuals, now is the time to assess whether current vehicle choices or lifestyle costs could be made more tax-efficient.

5. Income Tax and Threshold Freezes: The Stealth Burden

With thresholds frozen until 2028, more individuals will drift into higher tax bands without any real increase in purchasing power. This ‘fiscal drag’ often goes unnoticed until your payslip starts looking leaner.

Using salary sacrifice for pensions or electric vehicles, or maximising Individual Savings Accounts (ISA) allowances, can help soften the impact. Business owners might find that traditional salary/dividend splits need a second look. If you’re earning more but keeping less, it’s time to ask: is my structure still working for me?

6. Non-Dom Taxation: The End of the Remittance Basis

From April 2025, long-term UK residents will no longer benefit from the remittance basis. The new Foreign Income and Gains (FIG) regime means foreign income and gains are taxed on an arising basis.

Non-doms must now review asset structures, consider offshore trusts, and assess whether the UK remains the most tax-efficient base for them. If your global income or business is substantial, this change could reshape your financial future. Have you reviewed your domicile status with an adviser?

7. Pension Reforms: Lifetime Allowance Removed, Complexity Remains

While the abolition of the Lifetime Allowance might seem liberating, new limits on tax-free cash withdrawals and death benefits have introduced fresh complexity.

Pension savers must now consider the trade-offs between growing their pot and triggering unexpected tax charges. Are your pension contributions still working efficiently, or would alternative investments serve you better? Directors funding pensions through their companies should model long-term outcomes based on these new caps.

Corporate and Business Tax Changes

8. Employer National Insurance: Higher Costs, Broader Impact

The National Insurance Contributions (NIC) rate for employers has risen to 15%, while the earnings threshold has dropped to £5,000. This change will be most keenly felt by SMEs and those employing large numbers of low-to-mid earners.

Have you reviewed your employment structure, including the use of contractors or outsourced roles? Could the expanded £10,500 Employment Allowance provide partial relief? Payroll planning in 2025 requires sharper forecasting and possibly, difficult decisions.

9. Business Reliefs and NICs for the Self-Employed

The Small Profits Threshold and voluntary NIC rates have increased. While reliefs like Small Employers’ Relief have also improved, the net impact is a higher base cost for compliance.

Sole traders and small business owners should revisit their pricing strategies and understand how these changes affect pension entitlements and benefits. Are you charging enough to remain sustainable while building long-term protections?

10. Abolition of the Furnished Holiday Lettings Regime

From April 2025, the Furnished Holiday Let (FHL) regime no longer exists. Short-term lets are now taxed like any other residential rental, removing valuable reliefs such as capital allowances and lower CGT rates.

Holiday let landlords may need to reconsider their property strategy, should you transition to long-term letting, adjust pricing, or even sell? This change hits not only profitability but also exit strategy assumptions.

11. Business Rates Relief Tapered for Hospitality and Leisure

Relief for qualifying retail, hospitality and leisure properties has been cut from 75% to 40%, subject to a £110,000 cap. This is a substantial increase in fixed overheads.

Businesses must now reassess the financial viability of their premises. Should you consider renegotiating lease terms or relocating to lower-rated areas? Are you eligible to challenge your property’s rateable value?

Final Thoughts

The 2025 tax changes reflect a continuing shift toward increased complexity and cost for both individuals and businesses. With reforms spanning areas such as capital gains, pensions, SDLT, and corporate contributions, many clients may find that strategies which once served them well now need to be reviewed.

Understanding the nuances behind each change and how they interact with your wider financial picture is crucial. Whether it’s optimising your business structure, planning asset disposals, or futureproofing your estate and pension arrangements, a clear strategy can make all the difference.

At Saul Fairholm, we provide practical, tailored tax advice to help you navigate these developments with clarity and confidence. If you’re unsure how these changes affect you, or if your current arrangements still meet your objectives, we’re here to help.

Contact our tax advisory team to arrange a consultation.