IMPORTANT 2025 UK Tax Changes

Matt | Personal Finance

IMPORTANT 2025 UK Tax Changes #tax #taxchanges #capitalgainstax   Big changes are coming to the UK tax system in 2025! In this video, we break down 5 major tax changes introduced in Rachel Reeves' Autumn Budget and explain exactly how they could affect your finances   We go through the new tax rules, examples showing the potential cost impact and practical tips to consider to mitigate and reduce your tax costs   With many of the changes starting from 1 April 2025, it’s important to be aware of these new tax rules so you can protect your finances as much as you can   🔎 Related Phrases:   IMPORTANT 2025 UK Tax Changes, How The Rich Avoid Paying Taxes, How To Pay Less Tax, How To Reduce Capital Gains Tax, How To Reduce Tax On Investments, How To Reduce Tax On Pension Savings, How To Pay Less Tax On Savings And Dividends, How To Save Tax On Rental Income, How Much Tax Do I Have To Pay, How To Complete A Tax Self-Assessment, What Are The Savings Tax, Income Tax And Capital Gains Tax Thresholds, How To Pay Tax Online   #shares #stockmarket #investing #stampduty #home #homeownership #flat #airbnb #firsttimehomebuyer #vehicle #car #roadtax #privateschools #personalfinance #moneytips #stocks&sharesisa #taxplanning #savings

Transcript

00:00The autumn budget last year announced some major tax changes in the UK.

00:04This video covers the key changes to be aware of ahead of April this year and the start of the next

00:10tax year. Even before these tax changes, the average UK household will pay over £1.2 million

00:16in tax over their lifetime. So understanding what changes are coming in and how you can

00:22mitigate them is really important to be able to protect your finances. If you're new to this

00:27channel, I'm Matt. I've been a finance consultant for over 10 years. I now run my own company

00:32and on this channel I talk all things personal finance. So the first tax change that I'm going

00:37to cover is on vehicle excise duty. This is a tax payable for every car that uses public roads in

00:43the UK. Currently electric vehicles don't have to pay this tax but from the 1st of April 2025

00:49there's going to be a big change as for the first time owners of electric vehicles will also need

00:55to pay this tax. For vehicles registered after the 1st of April 2017, the standard rate of £195 per

01:03year will be payable. This will also apply to petrol and diesel vehicles as well but the biggest impact

01:09will be on the purchase of brand new cars with high CO2 emissions. For example, if you had the money

01:14to be able to purchase a Range Rover Sport 4.4 V8 then you'd have to pay an eye-watering £5,490

01:22in tax. So if you're in the market for a new car it's important to look at its CO2 emissions to

01:28understand its impact on the total cost of ownership for the vehicle. The second tax change is on capital

01:34gains tax. This is now payable on gains of over £3,000 from selling assets, for example cryptocurrency

01:41assets or stocks and shares that's outside an ISA. The tax-free allowance is £3,000 per year so you can

01:48make a gain of this much before you have to pay capital gains tax. Last year the tax rates were

01:54increased. For the basic rate taxpayer it was increased from 10% to 18% and for the higher rate

02:00and additional rate taxpayer it was increased from 20% to 24%. If you're thinking about selling assets in

02:06the short term then it's worth considering whether to sell some of the assets that you want to dispose of

02:11prior to the 5th of April this year. So you can use your £3,000 capital gains tax-free allowance

02:17in this personal tax year and then you could dispose of additional assets after the 6th of April

02:23to benefit from the £3,000 tax allowance in the next personal tax year. For example if you wanted to

02:29dispose of some cryptocurrency which had increased in value and your total gain was £6,000. If you sold

02:36and realised that gain prior to the 5th of April you would have to pay £540 if you're a basic rate

02:43taxpayer and £720 if you're a higher rate or additional rate taxpayer. Whereas if you sold

02:49and realised a gain of £3,000 prior to the 5th of April and a further £3,000 after the 6th of April

02:56then no capital gains tax would be due as it's within your tax allowance for each personal tax year.

03:02The third tax change is on stamp duty. The thresholds for paying tax on property purchases

03:07are about to change. If you're a first-time buyer before the 1st of April the property value can be

03:14up to £425,000 before you start paying tax and if you're an existing homeowner moving home the

03:21property value can be up to £250,000. However the nil rate tax band is reducing to £300,000 for first-time

03:29buyers and to £125,000 for everyone else. That means for a £400,000 property a first-time buyer

03:37would pay £0 in stamp duty before the end of March 2025 and £5,000 from the 1st of April and

03:45home movers would go from paying £7,500 to £10,000 based on the new tax rules. So it's quite a

03:53significant impact to the savings needed for both home movers and first-time buyers.

03:58The fourth tax change is for furnished holiday lettings. In April of this year the UK government

04:03will be reducing lots of the beneficial tax advantages that short-term lettings currently

04:08receive. So that applies to Airbnbs. Higher or additional rate taxpayers are going to be impacted

04:15the most by these changes. At the moment you can deduct your full mortgage interest from your

04:20rental income but this is going to be restricted from April 2025 to a 20% tax credit. This therefore

04:26doesn't have an impact on basic rate taxpayers who pay 20% tax anyway but it will have an impact on

04:33higher or additional rate taxpayers who pay 40% or 45% in income tax. For example for someone who is a

04:40higher rate taxpayer and receives £22,000 in rental income from an Airbnb property. If the mortgage interest

04:48is £5,000 before April the tax bill income would be £17,000 so that's a tax bill of £6,800 at a 40%

04:58income tax rate. Now with the changes you can no longer deduct the £5,000 mortgage interest in full.

05:04You have to pay tax at 40% on the £22,000 rental income which equals £8,800 and then you receive a

05:1320% tax credit on the £5,000 mortgage interest which in this example equals £1,000 as a tax credit.

05:20So the effective tax liability is £7,800 that's £1,000 more than before this tax change comes into

05:28effect. The fifth and final tax change that I'm going to cover in this video is applying VAT on

05:33private school fees. The UK government removed the VAT exemption on private school fees and from the 1st of

05:40January 2025 private schools have been required to charge VAT on their fees. There are some things

05:46which might be exempt such as school meals but for the bulk of the fees like education and boarding

05:52costs VAT will be applied. So that wraps up five key tax changes to be aware of this year and ahead

05:58of the new personal tax year starting in April. I know personally tax increases is not a nice topic

06:05but it's important to understand it so you can try and mitigate the tax increases as much as

06:10possible. If you found the video useful please do subscribe to my channel give the video a like

06:15and I'll see you on the next video.

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