Tax Rates and Allowances 2025/2026

tax rates and allowances 2025/2026

Tax Rates and Allowances 2025/2026

As the new tax year commences in April 2025, several significant changes have been introduced that will impact businesses across the UK. At Simply Balanced Solutions, your trusted bookkeeping partner in Clanfield, Hampshire, we aim to keep you informed and prepared. Here’s a breakdown of the key updates:

Income Tax Rates and Thresholds

The income tax rates for England remain unchanged for the 2025/26 tax year:

  • Personal Allowance: £12,570

  • Basic Rate (20%): £12,571 to £50,270

  • Higher Rate (40%): £50,271 to £125,140

  • Additional Rate (45%): Over £125,140

Other tax rates and allowances 2025/2026 can be found on the GOV.UK website.

Minimum Wage Increases

Effective from 1st April 2025, the National Minimum Wage and National Living Wage rates have increased:

  • National Living Wage (21 and over): £12.21 per hour

  • Ages 18–20: £10.00 per hour

  • Under 18s and Apprentices: £7.55 per hour

These adjustments represent significant increases, particularly for younger workers and apprentices.

Employer National Insurance Contributions

From 6th April 2025, employers face notable changes to National Insurance contributions:

  • Increased Rate: The employer NIC rate has risen from 13.8% to 15%.

  • Lowered Threshold: Employers now start paying NICs on employee earnings above £5,000 per year, down from the previous £9,100 threshold.

These changes mean that employers will incur higher NIC costs, even for lower-paid employees.

Employment Allowance Enhancements

To alleviate some of the increased NIC burden, the Employment Allowance has been increased:

  • New Allowance: £10,500 per year, up from £5,000.

  • Eligibility Expansion: The previous restriction disallowing employers with NIC bills over £100,000 from claiming the allowance has been removed.

This change allows more businesses to benefit from reduced NIC liabilities.

Making Tax Digital (MTD) for Income Tax Self-Assessment

While not immediate, it’s crucial to prepare for the upcoming MTD requirements:

  • Effective Date: From April 2026, self-employed individuals and landlords with income over £50,000 will need to comply with MTD for Income Tax Self-Assessment.

Early adoption of compatible digital record-keeping systems is advisable to ensure a smooth transition.

Stay Ahead with Simply Balanced Solutions

The April 2025 tax changes bring both challenges and opportunities for UK businesses. Proactive planning and informed decision-making are key to navigating these updates effectively.

At Simply Balanced Solutions, we are committed to supporting businesses in Clanfield and the surrounding Hampshire area with expert bookkeeping and tax advisory services.

Contact us today to discuss how these changes may affect your business.

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