Four tax changes you need to know about from 6 April

As the new tax year began on 6 April 2025, it brought with it several significant changes (previously announced in the 2024 Autumn Budget) that could have an impact on your personal finances.

Here’s a summary of the main changes you need to know about. 

1. Employer National Insurance Contributions (NICs) have increased

Class 1 employers NICs, which are paid by employers on earnings, have increased from 13.8% to 15% for all employees earning more than £5,000 per year.

To soften the impact this will have on business owners, the employment allowance, which allows some employers to reduce their National Insurance (NI) liability, has been increased from £5,000 to £10,500. As a result, around 865,000 businesses won’t pay any NI at all this tax year¹.

2. Capital Gains Tax (CGT) rates for Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) have risen

Rates for BADR and IR have risen from 10% to 14% (and are due to rise again to 18% from April 2026). BADR and IR can help lower your CGT bill when selling your business or shares in a company that’s not listed on the stock exchange.

The maximum qualifying gains you can claim BADR and IR for (also called the lifetime limit) is £1m.

3. The CGT rate on carried interest has risen to 32%

CGT on carried interest, a performance-related reward given to some fund managers, has increased from 28% to 32%.

From April 2026, carried interest will be fully taxed within the income tax framework, with bespoke rules to reflect its unique characteristics, and a 72.5% multiplier applied to qualifying carried interest that is brought within charge. This means that an additional taxpayer would have an effective income tax charge of 32.625% on carried interest.

The change in treatment to income tax could result in carried interest potentially being within scope of the inheritance tax exemption for gifting out of excess income. However, tax rules are complex, so you may wish to speak to a tax adviser.

4. The non-domiciled (non-dom) status has been abolished

The non-dom status tax status has been abolished. It applied to people living in the UK who were considered domiciled elsewhere under British law. UK non-doms only had to pay UK tax on money they earned in the UK, with foreign income only taxed if it was remitted into the UK.

It has been replaced by a new residence-based tax regime, which will apply to individuals who’ve been resident in the UK for ten of the last 20 tax years (also called long-term residents). 

Eligible individuals won’t pay tax on foreign income or gains in the first four tax years of UK residency and will be able to bring these funds to the UK free from any additional charges (provided they haven’t been UK tax resident in any of the ten consecutive years prior to their arrival).

A new residence-based system for IHT has also been introduced. It will affect the scope of non-UK property subject to UK IHT for both individuals and trusts. Long-term residents will be considered in scope for IHT on their non-UK assets, and will remain in scope of IHT for between three and ten years after leaving the UK.

Speak to a tax adviser if you’ve concerned about what this may mean for you.

Next steps

Making the most of your tax allowances or structuring your investments tax efficiently can be complex, and that’s where getting financial planning or tax advice could help.

A financial adviser can help structure your portfolio to help manage the impact of tax changes on your finances. That way, you can feel more confident that you’re making the most of your money.

¹UK Autumn Budget 2024

The value of investments, and any income from them, can fall and you may get back less than you invested. This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should always check the tax implications with an accountant or tax specialist. Information is provided only as an example and is not a recommendation to pursue a particular strategy.