Business tax reforms from 6 April – Higher NICs, FHL changes & more

Businesses across the UK should prepare for several significant tax changes coming into effect from 6 April 2025, according to the ICAEW.

While some of these changes, such as increases to employer National Insurance Contributions (NICs), have been widely discussed, others—like adjustments to the tax treatment of double cab pick-ups (DCPUs)—may have gone unnoticed.

ICAEW Technical Manager for Tax, Stephen Relf, warns that these adjustments will have a notable impact on employers, landlords, and business owners.

“The start of the new financial year in April will see some significant tax changes for businesses, some of which were announced at the Autumn Budget 2024,” Relf explains.

“Others first saw life under the previous government and have since been tweaked, such as the abolition of the special tax rules for furnished holiday lets. Either way, they all represent important changes from this April, so businesses need to be prepared.”

1. Employers Face Higher NIC Liabilities

One of the most impactful changes will be the increase in employer NIC rates. The rate of secondary NIC paid by employers on an employee’s earnings above the secondary threshold will rise from 13.8% to 15%. At the same time, the secondary threshold—the point at which employer NICs become payable—will be reduced from £9,100 to £5,000 per year.

As a result, government estimates suggest that 940,000 employers will see an increase in their NIC liabilities in the 2025/26 tax year.

2. Expanded NIC Employment Allowance for Smaller Employers

To offset the impact of rising NIC costs on smaller employers, the NIC employment allowance will increase from £5,000 to £10,500 from 6 April 2025. Previously, the allowance was only available to businesses with a prior tax year NIC liability of £100,000 or less—but this restriction will be removed.

However, some restrictions still apply. For instance, businesses where only one person is paid above the secondary threshold, and that person is a director, will not be eligible for the allowance.

3. Double Cab Pick-Ups (DCPUs) to be Treated as Cars

Under current HMRC guidance, double cab pick-ups (DCPUs) with a payload of one tonne or more are classified as vans for tax purposes. However, from 6 April 2025, HMRC will assess vehicles based on their primary suitability at the time of manufacture. This change means that most DCPUs will now be treated as cars for:

• Capital allowances
• Benefit-in-kind (BIK) tax calculations
• Business expense deductions

The shift is likely to increase tax liabilities for businesses that rely on these vehicles. However, transitional rules will apply in some cases to preserve the previous treatment. Importantly, no changes will be made to VAT treatment.

4. End of Furnished Holiday Let (FHL) Tax Breaks

The special tax treatment for Furnished Holiday Lets (FHLs) will be abolished from 6 April 2025 for individuals and from 1 April 2025 for companies. Under current rules, FHL owners benefit from:

• The ability to deduct mortgage interest in full
• Eligibility for capital allowances on certain expenses
• Access to Capital Gains Tax (CGT) reliefs, such as Business Asset Disposal Relief

From April, these advantages will be removed, and FHLs will be taxed under the standard UK or overseas property business rules. Transitional rules will allow capital allowances to be claimed in certain cases.

5. HMRC Interest Rates on Late Payments to Rise

From 6 April 2025, the interest rate charged by HMRC on unpaid tax liabilities will increase by 1.5 percentage points. This means that, assuming the Bank of England base rate remains unchanged, the standard interest rate for most unpaid taxes will rise from 7% to 8.5%.