11 major tax changes in April and how they affect you

Sweeping changes to the tax system came into effect this week, with further updates scheduled for this weekend, marking the start of the new tax year. These updates include tax and levy hikes, new reporting requirements, and reforms to the tax treatment of "non-doms" and landlords.

The majority of the changes will take effect on Sunday, 6 April, although some took effect from the beginning of the month. Ellen Milner, CIOT Director of Public Policy, noted: "The start of the new tax year brings plenty of change for taxpayers and their employers.

"Some of this week's changes are simply tax rises to raise revenue for public spending, the employer national insurance increase, for example. Others, such as the revised tax treatment of non-doms and those who let out holiday homes, whilst also aimed at raising revenue, are significant structural reforms.

"Then there are the alterations to tax administration, such as additional reporting requirements for sole traders and company directors, which are largely about improving compliance."

Get all the latest money news and budgeting tips from Chronicle Live with our free newsletter

Here are 12 key tax changes taking place in April that taxpayers should be aware of, reports the Mirror.

Employer National Insurance

The increase From Sunday, April 6, employers will see a rise in their National Insurance Contributions (NICs) from 13.8% to 15%, with the threshold dropping from £9,100 to £5,000. The Employment Allowance, which allows eligible employers to reduce their National Insurance liability, will also increase from £5,000 to £10,500, providing relief for smaller employers.

Council tax

Council tax has seen an increase from April 1, with an average rise of 5% in England, between 6% and 15.6% in Scotland, and between 4.5% and 9.5% in Wales. Now is the time to check if you're eligible for a council tax discount - for example, if you're living alone, you get 25% off your council tax bill.

It's also worth checking if you can challenge your council tax band. If you're in too high of a band, you may be due thousands of pounds back, plus lower bills going forward.

Stamp Duty

As of April 1, the temporary cut in Stamp Duty Land Tax nil rate thresholds in England introduced in 2022 ended.

Under the former regulations in England and Northern Ireland, stamp duty was payable if your property was your sole residence and valued over £250,000. This increased rate was implemented in September 2022 but reverted to its previous level of £125,000 after March 31.

The threshold for first-time buyer relief also fell from £425,000 to £300,000, with the maximum purchase price for first-time buyers relief dropping to £500,000 and £125,000 for other purchasers.

HMRC payments

From April 6, HMRC is increasing the official interest rate for late tax payments by 1.5% to 8.5%. The current late payment rate is 7%, a figure that has remained unchanged since February 25, 2025.

HMRC interest rates are legislated and tied to the Bank of England base rate, thus they fluctuate with it. The late payment interest rate was previously set at the Bank's base rate plus 2.5%.

However, this was altered in the Autumn Budget and is now set as the Bank's base rate - currently 4.5% - plus 4%.

Self-employed

From April 6 - marking the start of the 2025-26 tax year - the formerly voluntary requirement for taxpayers who commence or cease trading to report the start and end dates on their self-assessment tax return will become compulsory.

Company directors

There's also a new reporting requirement for company directors.

From Sunday, directors of close companies - businesses managed by their owners - are required to separately report dividend income received from their companies and their percentage shareholding on their self-assessment tax return. They must also provide the company's name and registration number.

Car tax

Starting in April, Vehicle Excise Duty (VED) rates, more commonly known as car tax, have increased in line with Retail Price Index (RPI) inflation. Car tax is an annual legal requirement for all vehicles registered in the UK.

The tax is paid when the vehicle is first registered, covering the car for the next 12 months.

Subsequent vehicle tax payments are made every six or 12 months at a different rate. The initial registration rate is based on your vehicle's CO2 emissions, which is what has changed.

Rates for cars emitting between one and 50 grams of CO2 per kilometre, including hybrid vehicles, have risen from £10 to £110 for 2025-26 for the first year. Similar increases have been seen for cars emitting 51-75g/km of CO2, with the cost rising from £30 to £130.

The most significant price increase has been for owners of vehicles that emit 76g/km of CO2 and above, as rates have "doubled from their previous level. The lowest rate in this category - 76-90g/km - sat at £135, but under the new changes, it now sits at £270.Brits who buy the most polluting petrol and diesel cars (over 255g/km) from April 1, 2025, now have to fork out £5,490 - up from the previous £2745.First-year VED rate for new zero-emission vehicles now sits at £10 until the 2029-30 tax year - which is £10 more than what they were paying before April. From the second tax payment onwards, EV drivers now pay the standard rate, which is £195.Changes to Capital Gains Tax reliefsCapital Gains is a tax charged if you sell, give away, exchange, or dispose of an asset-such as a second home, shares in companies, art, or jewellery - and make a profit or ". The lowest rate in this category - 76-90g/km - was £135, but under the new changes, it now stands at £270.

Brits who purchase the most polluting petrol and diesel cars (over 255g/km) from April 1, 2025, will now have to pay £5,490 - up from the previous £2745.

The Vehicle Excise Duty (VED) for new zero-emission vehicles has been set at £10 for the first year until the 2029-30 tax year, a £10 increase from what was previously charged before April. From the second tax payment onwards, EV drivers will now pay the standard rate of £195.

Capital Gains Tax

Changes have also been made to Capital Gains Tax reliefs. Capital Gains is a tax levied when you sell, give away, exchange, or dispose of an asset - such as a second home, company shares, art, or jewellery - and make a profit or "gain."

This tax applies not only to individuals but also to company owners, business partners, and self-employed people.

In the October Budget, the lower rate of Capital Gains Tax (CGT) increased from 10% to 18%, while the higher rate rose from 20% to 24%. On April 6, the rates payable by taxpayers eligible for Business Asset Disposal Relief and Investors' Relief will rise from 10% to 14%.

This will further increase next year to 18%. The rate for "carried interest" gains will also rise from a range of 18-28% to a single rate of 32%.

Landlord allowances

Landlords are also set to lose access to certain allowances. The separate tax regime for furnished holiday lettings (FHLs) was abolished on April 1 for companies and will be scrapped for other businesses on Sunday, April 6.

The current rules for furnished holiday lettings mean that qualifying holiday lets are treated as a trade for certain tax purposes, giving them a tax advantage over non-FHL property businesses. These advantages include the availability of capital allowances and capital gains tax reliefs.

Non-doms

Changes to tax rules for non-doms.

Rachel Reeves revealed that the "non-dom" tax status will be scrapped from April 2025. The status allows some UK residents whose permanent home is abroad to avoid paying UK tax on foreign earnings.

Those with non-dom status currently only pay tax on income earned within the UK. From now on, long-term residents will have to pay UK tax on income and gains made worldwide, even if they don't consider the UK their permanent home.

Under previous rules, the "remittance basis" allowed non-doms to avoid UK tax on foreign income and gains as long as they didn't bring the funds into the UK. To make the transition smoother, a Temporary Repatriation Facility will be introduced, allowing those who've used the remittance basis to bring foreign income into the UK with reduced tax charges.

Those new to the UK can also enjoy tax exemptions on foreign income and gains for up to four years. Additionally, a new residence-based system for inheritance tax will be put in place.

Agricultural property relief extension

Starting April 6, the scope of Agricultural Property Relief (APR) from Inheritance Tax will be expanded to include land managed under environmental agreements. This means that taking land out of agricultural production temporarily or permanently for environmental reasons will not disqualify it from tax relief.

Landowners contemplating a shift in land use to accommodate environmental schemes should take note. More extensive modifications to the relief, initially announced in last year's October Budget, are anticipated to be implemented in a year's time.