How will your business be affected?
The new month and start of the 2025/26 financial year have brought a raft of changes – both big and small – that directors and business owners need to be aware of and financially account for.
While wage and tax increases have been well trialled in the media already, there are several other changes to employment rights and even recycling that you need to know about to make sure your business doesn’t incur any further expenses.
Here’s a summary of the most important things that directors and business owners need to be aware of.
New Recycling Regulations
Businesses with ten or more employees now have new legal obligations when it comes to their recycled waste.
They now have to legally separate waste into different categories: dry recyclables, food waste and black bin waste.
Failure to follow these rules could result in fines and companies that use waste management firms will need to liaise with them to find their inquiries.
These rules will become mandatory for all businesses, no matter what size, from March 31st 2027.
Minimum Wage
The National Living Wage has increased for staff over 21 years of age and the National Minimum Wages has also increased for workers aged 18 to 20. Rates have also changed for apprentices and those under 18. The new rates for 2025 are:-
| 2025 Rate of pay | Aged 21+ | Aged 18 to 20 | Aged under 18 | Apprentices |
| £12.21 | £10.00 | £7.55 | £7.55 |
Increasing Employer’s National Insurance
The amount employers pay in National Insurance for each employee will increase from April 6th 2025 from 13.8% to 15% while the secondary threshold will also be reduced to £5,000 a year.
| 2024/25 rates | 2025/26 rates | |
| National Insurance Rate | 13.8% | 15% |
| Annual threshold | £9,100 | £5,000 |
| Monthly threshold | £758 | £417 |
| Weekly threshold | £175 | £96 |
Employment Allowance Increase
The employment allowance will increase from £5,000 to £10,500 which could reduce a businesses tax bill. Employers can claim the allowance in order to reduce their secondary Class 1 National Insurance contributions.
Company size thresholds
New criteria have been established to categorise businesses by size based on various criteria. These are:-
| Business size | 2024/25 turnover threshold | 2025/26 turnover threshold | 2024/25 balance sheet total | 2025/26 balance sheet total | Number of employees |
| Microbusiness | £632,000 | £1 million | £316,000 | £500,000 | 10 |
| Small business | £10.2 million | £15 million | £5.1 million | £7.5 million | 50 |
| Medium business | £36 million | £54 million | £18 million | £27 million | 250 |
| Large business | Over £54 million | Over £54 million | Over £18 million | Over £27 million | Over 250 |
Capital Gains Tax & Business Asset Disposal Relief (BADR)
Business Asset Disposal Relief (BADR) is the successor to Entrepreneurs’ Relief and will increase from 10% on April 6th 2025 to 14%. It is also scheduled to rise again by 4% in April 2026 to 18%.
Directors selling any qualifying assets need to understand that they will be facing a higher tax liability on their gains for the next couple of years at least.
Capital Gains Tax was raised to 24% from 20% in the Autumn Budget in October 2024 with the lower rate increasing to 18% from 10%.
Business Rates
The standard multiplier for business rates will increase to 55.5p from April 6th with the existing relief for retail, hospitality and leisure firms being reduced from 75% to 40%.
Companies House privacy updates
Businesses registered at Companies House will be able to hide their business address from public view if it is the same as their home address.
There are more privacy updates coming throughout 2025 including the ability to redact and hide the following:-
- Residential addresses in most instances when shown elsewhere on the register
- Date of birth for documents registered before October 10th 2015 – since this date, only the month and year of birth have been publicly displayed
- Signatures
- Business occupation
Companies House will also be introducing a new identity verification process in order to crack down on fraudulent businesses. From Autumn 2025, directors will need to verify their identity in order to set up or control a business in the UK.
Employment Rights Bill
The Employment Rights Bill published in October 2024 will begin to be implemented at some point in 2025 which will include the following changes that business owners and directors will need to be aware of.
- Ending of enforced “zero hour” contracts
- Day one entitlement to parental and bereavement leave
- Protection against unfair dismissal
- Easier access to flexible working arrangements
- Improvements to Statutory Sick Pay
- Ending “fire and rehire” practices
- Greater protection for pregnant workers and new mothers
- Creating a Fair Work Agency
Discrimination Law developments
The Equality Act became the Worker Protection Act in October 2024 with further protections for employees and this could be amended further with the results of various workplace discrimination cases working their way through the courts such as Higgs v Farmor’s School in February which found that an employee sharing controversial beliefs outside of work, including on social media, could result in unfair dismissal.
As the rest of 2025 unfolds, there will be more unseen milestones and molehills that could trip up even the most nimble and surefooted businesses so it’s prudent to make any necessary and important changes sooner rather than later.
We offer a free initial consultation to any director who wants to discuss their options based on their current and future financial situations.
Our advisors will be able to let you know what is feasible and realistic depending on your goals and you might be surprised by how much leeway and room to manoeuvre you have – but only if you get in touch soon while you still have the time to make the decisions and set the agenda yourself.