Outlook for 2025
Real GDP is estimated to have grown 0.1% in the last 3 months of 2024 compared with the previous quarter, and 0.8% in 2024 compared with 2023. Whilst these figures are low, it is still movement in the right direction.
2025 is going to be a tough year with the changes in Employer taxes, but the S&P Global UK Manufacturing Purchasing Managers Index (measuring manufacturing output, orders and employment) has recovered slightly in January 2025 but had deteriorated towards the end of 2024. A reading above 50 indicates economic expansion. The forecast is currently hopeful.
KEY APRIL 2025 TAX CHANGES
You probably don’t need reminding, but the employers NI rate will increase to 15%. As it stands currently there are no changes to employees NI.
Business asset disposal relief (BADR) offers a reduced tax rate on business and asset sales for the individual. This rate is worsening from 10% to 14% in April. So closing out pending transactions before the 5th April 2025 could bring about significant savings.
COMPANY SIZE THRESHOLDS
These are important as they determine the type of accounts a company must prepare and set the trigger for requirement to audit. As previously reported these had been set to increase and are now confirmed as changing for accounting periods starting after 6 April 2025. Until a company exceeds two of the criteria (changing to turnover at £15m, total assets of £7.5m and 50 employees) then it is considered small or possibly micro and does not require an audit.
MAKING TAX DIGITAL
Anyone acting as a soletrader or a landlord with trading income above£50,000 must operate under "making tax digital" (MTD) from 6 April 2026. This will require all records to be kept digitally; quarterly updates to be provided to HMRC and the year end self-assessment to be submitted to HMRC through compatible software. We can provide this service using xero as our key accounting partner.
XERO INVOICING
The classic style of xero invoicing is being turned off at the end of February 2025 so worth familiarising yourself with the new invoicing format before the switch. Dan is available to assist you with the transition.
