The numbers you need to know in 2025
Several key tax changes are reshaping the financial landscape in 2025, and staying ahead of them is crucial for effective planning.
From 6 April 2024, the Capital Gains Tax (CGT) annual exempt amount was cut to £3,000 for individuals and personal representatives and £1,500 for most trusts, and these levels are currently fixed for the 2024/25 and 2025/26 tax years. This means even modest investment gains may now be taxable unless they’re sheltered in wrappers such as ISAs or pensions.
From 30 October 2024, the main CGT rates on most assets increased to 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. For the 2025/26 tax year, these rates now generally apply to most chargeable gains, including residential property gains that do not qualify for Private Residence Relief. Gains on carried interest are charged at higher, specialised rates.
From 6 April 2025, the Business Asset Disposal Relief (BADR) rate increased from 10% to 14% on qualifying gains (up to the £1 million lifetime limit). This raises the potential CGT bill on business or share disposals where BADR applies, so timing and structuring of exits are now even more important.
The Dividend Allowance was reduced to £500 from 6 April 2024 and remains at £500 for 2025/26. Above this, dividend income is taxed at 8.75% for basic-rate, 33.75% for higher-rate and 39.35% for additional-rate taxpayers. With such a small tax-free allowance, making early use of ISA allowances and other tax-efficient investment wrappers is more important than ever.
Meanwhile, Inheritance Tax (IHT) thresholds remain frozen at £325,000 (nil-rate band, NRB) and £175,000 (residence nil-rate band, RNRB), and current legislation keeps these levels in place at least up to 5 April 2030. As property values and inflation rise, more estates are being brought into the 40% IHT net unless proactive planning is undertaken.
From 6 April 2025, the UK is abolishing the traditional non-dom regime and moving fully to a residence-based system for foreign income and gains. The old remittance-basis rules will end and be replaced by a new 4-year regime for recent arrivals, while long-term UK residents will generally be taxed on worldwide income and gains. Anyone with offshore assets, trusts or longstanding remittance-basis planning should review their position urgently in light of the new rules and transitional facilities.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
