Will 2025 Be the Year of Major Tax Changes? How to Prepare

As the UK moves through 2025, a number of significant tax changes are on the horizon.

From changes to Capital Gains Tax (CGT) to potential reforms in Stamp Duty Land Tax (SDLT) and corporation tax, staying ahead of these shifts will be crucial for managing your tax affairs efficiently. This guide provides essential steps to prepare effectively for these tax changes before the 2025/2026 tax year.

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Capital Gains Tax (CGT) – Will Rates Rise?

How to Prepare for the 2025 Capital Gains Tax Rise

CGT rates rose on 30 October 2024 to 18% (within the basic rate band) and 24%, applying to property, shares, and other asset sales.

What You Need to Do Now:

• Explore Tax-Efficient Exit Strategies: Investigate ways to reduce your CGT liability by making use of annual exemptions or considering gifting assets to family members, which could result in lower taxes on capital gains.
• Consult a Tax Advisor: Schedule a meeting with ASWATAX to assess your portfolio and develop a tailored strategy that considers both the anticipated rate changes and your long-term financial goals.

Stamp Duty Land Tax Reforms – Potential 2025 UK Tax Changes

Staying Ahead of SDLT Changes in 2025

The 5% surcharge on additional dwellings has applied since 31 October 2024, and from 1 April 2025 the residential nil-rate band for Stamp Duty Land Tax (SDLT) fell from £250,000 to £125,000.

What You Need to Do Now:

• Stay Updated on Proposed Changes: Watch for any government announcements regarding reforms to SDLT. Higher rates on expensive properties or progressive SDLT structures could significantly impact your transaction costs.
• Plan Ahead for Property Transactions: If you are planning to buy or sell property in 2025, ensure that you are prepared for any changes to SDLT. Adjust your plans and timelines accordingly to mitigate tax impacts.

Upcoming Corporation Tax and dividend tax changes mean business owners must carefully review income strategies for 2025.

Dividend & Corporation Tax – Planning for Business Owners

Dividend vs. Salary: Tax-Efficient Choices for 2025

Upcoming Corporation Tax and dividend tax changes mean business owners must carefully review income strategies for 2025. Dividend tax rates rose to 10.75% and 35.75% from 6 April 2026, which could require reassessing how you structure your business income and personal remuneration.

What You Need to Do Now:

• Maximise Tax-Efficient Income Strategies: If you run a business, consider how to structure your remuneration. With the dividend tax increases now in force, it might be more tax-efficient to increase your salary instead of taking dividends, depending on your situation.
• Salary vs. Dividends in 2025: Given the increased dividend tax rates, business owners may need to adjust their approach. Reviewing the balance between salary and dividend payments could help minimise the tax burden in light of higher dividend tax rates.
• Seek Professional Advice: It’s essential to consult a corporate tax expert who can help you determine the most tax-efficient way to withdraw profits from your business under the new rules.

New Non-Dom Tax Rules Coming in 2025 (FIG Rules)

Preparing for Non-Dom Status Changes in the UK

The tax status of non-domiciled individuals (non-doms) in the UK changed on 6 April 2025: the remittance basis was replaced by the four-year FIG regime for qualifying new arrivals, and inheritance tax now turns on long-term residence rather than domicile.

What You Need to Do Now:

• Review Your Residence Position: Domicile is no longer the test, so review whether you qualify for the FIG regime and how many years you have been UK resident for inheritance tax purposes.
• Plan for Impacted Individuals: If you have significant overseas assets or income, ensure you are structuring your affairs in a tax-efficient manner ahead of the changes. This might involve setting up trusts or using offshore structures.

Pension & Inheritance Tax Planning Ahead of 2025 UK Tax Changes

Strategies to Protect Your Wealth from Upcoming Tax Reforms

Unused pension funds come into the estate for inheritance tax from 6 April 2027, the cap on 100% Business Property Relief and Agricultural Property Relief of £2.5m applies from 6 April 2026, and the nil-rate bands are frozen until 2031. Now is the time to review your pension contributions and estate planning strategies to make the most of current allowances.

What You Need to Do Now:

• Maximise Pension Contributions: If the pension allowance is reduced in 2025, you may want to maximise your contributions now. This could include taking advantage of annual pension limits to benefit from tax relief before any potential changes.
• Prepare for Potential Inheritance Tax Changes: Review your inheritance tax strategy and consider making gifts during your lifetime to reduce the value of your estate. Take advantage of exemptions and tax-free allowances before the rules change.
• Review Wealth Transfer Strategies: Ensure that your estate planning is up to date, using trusts or other tax-efficient strategies to manage wealth transfer. This can help minimise inheritance tax liabilities for your beneficiaries.

Conclusion: Be Proactive in 2025 Tax Planning

The 2025 UK tax changes are expected to bring about significant shifts in the way taxes are levied across the country. To make the most of current rates and allowances, it’s important to start planning ahead. Whether it’s managing your Capital Gains Tax, preparing for Stamp Duty Land Tax reforms, adjusting your business income strategy, or reviewing your inheritance tax plans, proactive steps now will ensure you are in the best position for the future.

At ASWATAX, we specialise in helping individuals and businesses navigate complex tax matters. If you’d like advice on how to prepare for the 2025 tax changes, contact us today.