6 tax changes you need to know about in 2025

The Autumn Budget saw new Chancellor Rachel Reeves outline a host of tax changes as she sought to stabilise the economy, but not all of them will leave you financially better off.

We take a look at the biggest tax changes coming in 2025, and what they mean for your money.

1. Capital gains tax rates for assets increased

Capital gains tax (CGT) is charged on the profits made from selling assets, such as investments or valuable possessions.

At the Autumn Budget, the Chancellor announced that CGT rates on assets would increase from 10% to 18% for basic-rate taxpayers, and from 20% to 24% for higher-rate taxpayers.

The change took place immediately and brings CGT rates on assets in line with rates on selling a second property.

Remember, you'll only pay CGT on any gain you make, rather than the sale price. Gains can also be offset against losses made when selling other assets.

• Find out more: Capital gains tax rates and allowances

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2. Stamp duty holiday comes to an end, plus rates hiked on second homes

The current extra stamp duty relief for first-time buyers and home movers in England and Northern Ireland is set to end on 31 March 2025. From 1 April, the stamp duty threshold for first-time buyers will drop from £425,000 to the previous rate of £300,000. 

From the same date, home movers will pay stamp duty on purchases over £125,000, rather than the current £250,000. For example, based on the new thresholds and stamp duty rates, a home mover completing on a property worth £500,000 in England or Northern Ireland would pay £15,000 in stamp duty rather than the current level of £12,500. 

The Autumn Budget also held bad news for anyone looking for a buy-to-let or second home, as it was announced that stamp duty for buy-to-let properties and second homes would increase by two percentage points. This change took place immediately.

Stamp duty rates and thresholds are different in Scotland and Wales.

• Find out more: Stamp duty calculator

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3. Inheritance tax freeze and new pension rules

When you die, if your estate is worth more than £325,000, your beneficiaries will be liable to pay inheritance tax of 40% on anything above this threshold. The threshold rises to £500,000 if the estate includes a residence passed to direct descendants, and up to £1m when a tax-free allowance is passed to a surviving spouse or civil partner.

The current IHT thresholds were due to be frozen until 2028, but this has been extended until 2030. As time goes on, the impact of inflation means that more estates are likely to exceed the frozen IHT threshold. 

In addition, unspent pension funds will count as part of your estate for IHT purposes from April 2027. While this change is still some years away, you may want to consider it now when making plans to pass on your assets.

• Find you more: Inheritance tax: thresholds, rates and who pays

4. Council tax rises

Households should brace themselves for higher council tax bills from April 2025.

Most councils in England are able to raise council tax rates by 5% without needing to call a referendum. 

Those rules remain unchanged for the next financial year, so you could see your council tax bill increase by up to 5% again in 2025. Given the average Band D council tax bill in England is currently £2,171, this could mean a rise of £109.

• Find out more: How to get a council tax reduction or refund

5. Increases in tobacco and alcohol duty

So-called 'sin taxes' on tobacco and alcohol were also targeted for rises in the Autumn Budget. 

From 30 October 2024, tobacco duty has risen by the Retail Price Index (RPI) measure of inflation plus 2%. Duty on hand-rolling tobacco has risen by RPI plus 10%. 

Meanwhile, from 1 February 2025 alcohol duty will rise in line with September 2024's RPI rate of inflation, which stood at 2.7%. 

However, alcohol duty rates on draught products, such as beer, below 8.5% alcohol by volume (ABV) will be cut by 1.7%, reducing the amount of tax on an average-strength pint by 1p.

Find out more: Best supermarket food and drink

6. Employer National Insurance increase

The government will increase National Insurance contributions for employers from 13.8% to 15% from 6 April 2025.

In addition, the threshold for when employers need to start paying the tax will be lowered from £9,100 to £5,000.

Although these changes won't affect most people directly, prior to the Budget some critics suggested that such a change could have a knock-on effect on employees, through employers offering lower pay increases or less generous employment benefits in future.

• Find out more: National Insurance rates and contributions