Small Business Tax 2025

Understanding UK Small Business Tax 2025 is essential for UK entrepreneurs. With tax regulations changing, staying informed will help businesses manage their tax obligations effectively.

In this blog, we cover key updates to 2025 small business tax updates, common mistakes to avoid, and strategies to save money on taxes.

Key Updates for 2025 UK Tax Regulations

1. Corporation Tax Changes in UK Small Business Tax 2025

From 1 April 2025, corporation tax remains:

• 25% for businesses with profits over £250,000
• 19% for small businesses with profits under £50,000
• Marginal relief for profits between £50,000 and £250,000

Read more about corporation tax on the HMRC website

2. Making Tax Digital (MTD) Rules for Small Businesses

• From April 2026: MTD applies to self-employed individuals and landlords earning over £50,000.
• From April 2027: Those earning over £30,000 must also comply.

Find out more about MTD on HMRC’s website

3. National Insurance (NI) Adjustments for Small Businesses

• Self-employed Class 4 NI: Reduced from 9% to 8% for profits between £12,570 and £50,270.
• Self-employed Class 2 NI: Abolished from April 2025.

Check the latest NI contribution changes on Gov.uk

4. VAT Registration Threshold & Changes in 2025

The VAT threshold remains £85,000, but discussions about future reductions continue.

Learn more about VAT registration from HMRC

Common Small Business Tax Mistakes

1. Poor Record-Keeping for Tax Compliance

HMRC requires businesses to keep financial records for at least six years. Failing to maintain accurate records can lead to compliance issues.

View HMRC’s guidance on record-keeping

2. Missing Tax Deadlines for Small Businesses

Filing late can result in fines. Important deadlines include:

• Self-Assessment Tax Return: 31 January 2025
• Corporation Tax: Due 9 months after year-end
• VAT Returns: Filed quarterly

View important tax deadlines on HMRC’s website

3. Not Claiming All Allowable Expenses

• ✔️ Home office costs
• ✔️ Business mileage
• ✔️ Professional subscriptions
• ✔️ Equipment & software

See HMRC’s list of allowable expenses

4. Not Saving for Tax Payments

Many small businesses underestimate tax liabilities. Planning ahead can help avoid cash flow problems.

Use HMRC’s tax calculator to estimate your income tax and plan payments.

Tax-Saving Strategies for Small Businesses

1. Use the £1,000 Trading Allowance

If your side income is under £1,000, you may not need to declare it.

2. Maximise the £1M Annual Investment Allowance

Deduct 100% of capital expenses like machinery and IT equipment.

3. Claim Research & Development (R&D) Tax Credits

If your business invests in new products or services, you may qualify for R&D tax relief.

Check R&D tax credit eligibility on Gov.uk

Plan Ahead for UK Tax Rules in 2025

Preparing for UK tax changes for small businesses will help ensure compliance and optimise savings.

Southside Accountants can assist with:

• ✅ Tax planning
• ✅ VAT compliance
• ✅ Financial management

Contact us today for expert support.