Key Tax Changes Entrepreneurs Must Know
- Capital Gains Tax (CGT) rate increases: As of 30 October 2024, taxpayer thresholds have shifted—lower/higher-rate CGT now at 18%/24% respectively for disposals falling within those bands. Business Asset Disposal Relief (BADR) will gradually increase from 10% to 14% on 6 April 2025, then to 18% from April 2026. (gov.uk)
- Non-dom reforms: Entrepreneurs who are foreign nationals or non-UK resident are no longer able to use remittance-basis; the FIG regime means foreign income/gains will be taxed under new rules after 4 years of residence. (gov.uk)
- Employer NIC changes: Secondary Threshold for employer NIC will be reduced, and employer NIC rate increased by 1.2 points from 6 April 2025. Smaller employers benefit via Employment Allowance rising. (gov.uk)
Strategic Planning Moves
- Time asset disposals wisely. If you hold assets likely to produce significant gains, consider disposing before rate increases if possible, or understand whether you’ll fall into higher rate bands.
- Evaluate foreign income/gain positioning. If you're considering relocating or becoming UK resident, take into account the 10-year non-residence look-back to qualify for FIG. Pre-planning around asset holding locations and timing can reduce exposure.
- Structure business expansion with business rates reliefs. Reliefs for retail, hospitality & leisure properties with rateable value < £500,000 are being made permanently lower. Entrepreneurs opening second premises should watch out for ‘cliff-edges’ in business rates. (gov.uk)
Example Scenario
James runs a tech startup and holds shares in another business which he plans to sell. If he sells after April 2025, under current CGT rules, as a higher rate taxpayer he’d pay 24%. If he sells before that date, he might benefit from the older lower rates or available reliefs. Also, if he utilises the non-dom reliefs and meets the FIG regime criteria, some of his foreign income might be sheltered during his first four years.
Compliance & Tax Efficiency Tips
- Keep detailed records of residence days and foreign income/gains, to prove qualification for FIG regime.
- Engage with accountants about estimating CGT earlier: momentum matters.
- For entrepreneurs employing people, watch NIC changes, especially if paying minimum wage roles. Be ready for payroll adjustments.
- Use Business Asset Disposal Relief appropriately, and plan business succession or exit strategies considering IHT reforms.
By combining awareness of recent reforms—on CGT, non-dom, NICs—with smart timing and structuring, entrepreneurs can preserve wealth and reduce unexpected tax bills.