What to watch for in the Spring Statement 2025

20 March 2025

With the 2025 Budget on the horizon, business owners will be keeping a close eye on potential tax changes that could impact their finances. While nothing is set in stone yet, early predictions suggest there could be key updates to National Insurance, Business Asset Disposal Relief, and other tax policies that may affect business owners’ plans for the year ahead.

Understanding what’s likely to change means businesses can plan ahead, manage costs, and avoid last-minute surprises. In this article, we’ll look at the expected tax updates for 2025 and what they could mean for you…

Predicted tax changes

While the full details of the 2025 Budget won’t be known until the official announcement, early predictions suggest that several tax changes could be on the way. Here are some of the key areas that business owners should be aware of:

1. National Insurance Contributions (NICs)

There’s speculation that employer NICs could increase from 13.8% to 15% for salaries above £5,000. If this happens, it would mean higher employment costs for businesses, especially those with larger payrolls. For the self-employed, there may also be adjustments to Class 2 and Class 4 NICs, which could impact take-home earnings.

2. Business Asset Disposal Relief (BADR)

Previously known as Entrepreneurs’ Relief, BADR allows business owners to pay a lower rate of Capital Gains Tax (CGT) when selling their business or assets. A possible increase in the BADR tax rate from 10% to 14% could mean a higher tax bill for those planning to exit or restructure their business. This could affect business owners who were considering selling in the near future.

3. National Living Wage increases

From April 2025, the National Living Wage is expected to increase to £12.21 per hour. While this benefits employees, it also means higher wage costs for businesses, particularly in industries with a large workforce on hourly pay. Business owners may need to review their payroll budgets and pricing strategies to accommodate these changes.

4. Stamp Duty Land Tax (SDLT) changes

A potential increase in the additional property surcharge from 3% to 5% has been discussed. This could impact landlords and property investors looking to expand their portfolios. Businesses that hold property as part of their operations may also need to consider the financial implications of these changes.

What these changes mean for business owners

If these tax changes go ahead, they could have a real impact on businesses and self-employed individuals across different industries. Here’s what they might mean in practice:

Higher employment costs

An increase in Employer NICs and the National Living Wage means businesses with employees will need to account for higher payroll expenses. This could put pressure on profit margins, especially for businesses in sectors that rely on lower-wage workers. Reviewing cash flow, pricing strategies, and staffing levels may become a priority.

Tax planning for business sales

If Business Asset Disposal Relief (BADR) rates increase, business owners thinking about selling in the near future may need to reassess their plans. A higher tax bill could reduce the financial benefit of selling, meaning some may choose to hold onto their businesses for longer or look at restructuring options.

Increased costs for property investors

A higher SDLT surcharge could make expanding property portfolios more expensive. Landlords and businesses with property holdings may need to factor these costs into their investment strategies. This could also have a knock-on effect on the rental market, as landlords look to balance out higher purchase costs.

Greater need for tax efficiency

With potential increases in tax liabilities, businesses and the self-employed may need to be more proactive in managing their finances. Looking at tax reliefs, allowable expenses, and business structures could help reduce the impact of these changes.

Final thoughts

The predicted tax changes for 2025 could bring higher costs for businesses and the self-employed, particularly in areas like payroll, business sales, and property investment. Now is a good time to review financial plans, explore tax-saving opportunities, and prepare for any adjustments that might be needed. For support, don’t hesitate to reach out to us.