Changes for business in 2025: Updates for small business owners and contractors

Grant Hamill

December 9, 2024
12:54 pm

As 2025 approaches, small business owners and contractors need to stay informed about key regulatory changes that could affect their finances.

These changes stem from announcements made in the Autumn Budget of October 2024. The government outlined key fiscal updates aimed at balancing economic growth with environmental and social priorities. Understanding how these updates affect your business or personal finances is essential for staying compliant and making informed decisions.

Here’s our breakdown of the most important updates and what they mean for you.

1. National minimum wage increase

From April 2025, the national minimum wage will rise from £11.82 to £12.39 per hour.

For small business owners employing staff, this means adjusting payroll budgets to accommodate higher wage costs.

Contractors who set their rates based on market conditions may also need to review their pricing to stay competitive.

What our team say:

“Working with recommended accountancy companies can help you stay compliant with payroll regulations and forecast cash flow accurately as wage costs increase.”

2. Vehicle tax changes for electric and low-emission vehicles

A significant shift in vehicle taxation will take place in 2025. Owners of electric and low-emission vehicles will now pay vehicle tax on par with petrol and diesel drivers. This applies to both new and existing vehicles.

If you run a business fleet or use an electric vehicle for work, prepare for these additional costs.

Businesses considering electric vehicles for tax incentives may need to reassess their plans.

What our team say:

“With the upcoming changes in vehicle taxation for electric and low-emission vehicles, it may be beneficial to explore tax-saving strategies and seek guidance on how these rules could impact your business finances and planning.”

3. Abolition of the non-domiciled tax status

The non-domiciled tax regime will be replaced with a residence-based system in 2025. If you’re a contractor or small business owner with international ties, this could impact how you’re taxed on global income.

This change aims to simplify the tax system, but it’s essential to seek professional advice if you have non-UK income streams.

What our team say:

“Accountancy companies that specialise in international tax will help you to gain insights on compliance requirements and effective tax management plans.”

4. State pension increase

Good news for pensioners! The UK state pension will rise by 4%, adding approximately £460 annually. While this may not directly affect small business owners or contractors, it’s a reminder to review your personal retirement plans.

What our team say:

“Developing a structured pension strategy that aligns with business goals and supports long-term financial security can benefit from professional financial guidance.”

Why work with a recommended accountancy company?

Directing your business and team through these changes can be challenging. Partnering with a recommended accountancy company ensures that you’ll stay compliant and financially prepared.

A good accountant can help you: