Personal Tax
2.1 National Insurance contributions rates and thresholds
As announced at Autumn Budget 2024, the government will use the September Consumer Prices Index (CPI) figure of 1.7% as the basis for uprating the Class 2 and Class 3 National Insurance contributions for the tax year 2025 to 2026. The Class 1 Lower Earnings Limit and Class 2 Small Profits Threshold will also be uprated by September CPI for the 2025 to 2026 tax year.
These changes will be made by secondary legislation that will be laid before parliament ahead of April 2025.
Most National Insurance limits and thresholds will be maintained at 2024 to 2025 levels, until 5 April 2028. Details can be found within Annex A.
2.2 Extension of National Insurance Contributions relief for hiring veterans
As announced at Autumn Budget 2024, the government is extending the employer National Insurance contributions relief for employers hiring qualifying veterans for a further year from 6 April 2025 until 5 April 2026.
This means that businesses will continue to pay no employer National Insurance contributions up to annual earnings of the Veterans Upper Secondary Threshold of £50,270 for the first year of a veteran’s employment in a civilian role. The government will extend the relief through secondary affirmative legislation ahead of April 2025.
2.3 Changes to secondary Class 1 (employers’) National Insurance — reducing the secondary threshold, increasing the rate and changes to the Employment Allowance
As announced at Autumn Budget 2024, the government will introduce legislation to reduce the Class 1 National Insurance contributions secondary threshold, from £9,100 to £5,000 per annum. This will take effect from 6 April 2025 until 5 April 2028.
Thereafter, the secondary Class 1 National Insurance contributions threshold will be increased in line with the Consumer Price Index (CPI).
The government will introduce legislation to increase the main rate of secondary Class 1 National Insurance contributions from 13.8% to 15%. The Class 1A and Class 1B employer rates will also increase in line with this.
The government will also introduce legislation to increase the Employment Allowance from £5,000 to £10,500 and remove the restriction that currently applies to the Employment Allowance, where only employers who have incurred a secondary Class 1 National Insurance contributions liability of less than £100,000 in the tax year prior are able to claim.
This will take effect from April 2025 and will mean eligible employers will be able to reduce their National Insurance contributions liabilities by up to £10,500 per year.
These changes will be introduced by primary legislation ahead of 6 April 2025.
2.4 Inheritance tax — unused pension funds and death benefits
As announced at Autumn Budget 2024, the government will bring unused pension funds and death benefits payable from a pension into a person’s estate for Inheritance Tax purposes from 6 April 2027.
As part of these changes, pension scheme administrators will become liable for reporting and paying any inheritance tax due on unused pension funds and death benefits.
2.5 Help to Save extension and reform
The government will extend the Help to Save scheme for 2 years, from April 2025.
As a result, the last date an account can be opened under the current scheme is 5 April 2027. From 6 April 2025, the eligibility of the scheme will be extended to all individuals in receipt of Universal Credit earning £1 or more.
The government has also launched a consultation on the most effective way to deliver the new scheme. This consultation also includes details of the design of the reformed scheme, developed following the responses received from the consultation published in April 2023.
2.6 ISA, Junior ISA, Lifetime ISA and Child Trust Fund annual subscription limits
As announced at Autumn Budget 2024, the annual subscription limit for:
- ISAs will remain unchanged at £20,000 until April 2030
- Junior ISAs will remain unchanged at £9,000 until April 2030
- Lifetime ISAs will remain unchanged at £4,000 until April 2030
- Child Trust Funds will remain unchanged at £9,000 until April 2030
These measures will apply to the whole of the UK.
2.7 Digitalisation of ISAs limit
As announced at Autumn Budget 2024, digital reporting for ISA managers will be mandatory from April 2027. Draft legislation will be published for a technical consultation in 2025.
2.8 British ISA
As announced at Autumn Budget 2024, the government will not proceed with the British ISA.
2.9 Setting the official rate of interest for quarter 3 of tax year 2024 to 2025
In-year increases in the official rate of interest (ORI) may take place, where appropriate, from 6 April 2025. The ORI is used to calculate the tax liability on employment related beneficial loans and living accommodation.
The rate will continue to be reviewed on a quarterly basis. Any changes in the rate will occur following a quarterly review, where appropriate.
The previous public commitment, made by the Inland Revenue in January 2000, that the rate will not increase in-year will no longer be applicable. As of 6 April 2025 the official rate of interest may increase, decrease, or be maintained throughout the year.
This measure will enable the official rate of interest to increase in-year where appropriate, ensuring employment-related beneficial loans and living accommodation are correctly valued.
2.10 Annual uprating of the van benefit charge and the car and van fuel benefit charges for tax year 2025 to 2026
As announced at Autumn Budget 2024, the government will be increasing the van benefit charge and the car and van fuel benefit charges using the September 2024 Consumer Prices Index (CPI).
The following new rates will come into effect from 6 April 2025:
- the van benefit charge will be £4,020 in tax year 2025 to 2026
- the van fuel benefit charge will be £769 in tax year 2025 to 2026
- the car fuel benefit charge multiplier will be £28,200 in tax year 2025 to 2026
The government will introduce legislation by statutory instrument in December 2024 to ensure the changes are reflected in tax codes for tax year 2025 to 2026.
2.11 Confirming plans to mandate the reporting of benefits in kind by payroll software from April 2026
The government confirmed at Autumn Budget 2024 that the use of payroll software to report and pay tax on benefits in kind will become mandatory, in phases, from April 2026. This will apply to Income Tax and Class 1A National Insurance contributions. This was first announced by the previous government in the January 2024 simplification update.
A technical note has been published which provides further clarification on plans for mandatory payroll reporting. The technical note confirms that, from April 2026, it will be mandatory to payroll all benefits in kind, except for employment related loans and accommodation. Payrolling for these 2 benefits will be introduced on a voluntary basis from April 2026 and the government will set out the next steps on when they will be mandated in due course.
2.12 Agricultural Property Relief and Business Property Relief
As announced at Autumn Budget 2024, the government will reform these reliefs from 6 April 2026. The existing 100% rates of relief will continue for the first £1 million of combined agricultural and business property.
The rate of relief will be 50% thereafter, and in all circumstances for shares designated as ‘not listed’ on the markets of recognised stock exchanges, such as AIM.
The government will publish a technical consultation by early 2025, and a summary of the changes has been published alongside Autumn Budget 2024.
2.13 Charity tax compliance
The government will support charitable giving by introducing legislation to prevent the abuse of the charity tax rules, ensuring that only the intended tax relief is given to charities. These changes will take effect from April 2026.
2.14 Ending contrived car ownership schemes
As announced at Autumn Budget 2024, the government will introduce legislation in a future Finance Bill to close loopholes in employee car ownership schemes to prevent them from being used to circumvent the company car tax benefit in kind charge.
The changes will take effect from 6 April 2026.
2.15 High Income Child Benefit Charge (HICBC) reform, simplification and targeting of economic support to households
As announced at Autumn Budget 2024, the government will not proceed with the reform to base the High Income Child Benefit Charge (HICBC) on household incomes. To make it easier for all taxpayers to get their HICBC right, the government will allow employed individuals to report Child Benefit payments through their tax code from 2025, and pre-prepopulate Self Assessment tax returns with Child Benefit data for those not using this service.
The government will also explore how better data use and sharing across government departments can improve the targeting of economic support to households, especially in times of crisis.
