Tax Rates

From April 2025, the Corporation Tax rates will stay as they are: a 25% rate for companies with profits above £250,000, a 19% rate for profits up to £50,000, and a gradually increasing rate for profits between £50,001 and £250,000 due to marginal relief.

Capital allowances

The Full Expensing rules provide companies a 100% deduction on new, unused plant and machinery (excluding cars) and a 50% deduction on integral features and long-life assets. The government may extend Full Expensing to leased assets in the future.

The Annual Investment Allowance, capped at £1 million annually, offers a 100% write-off on qualifying plant and machinery for all businesses.

The 100% First Year Allowances for zero-emission cars and EV charge points are extended until March 2026 for corporation tax and April 2026 for income tax.

Holiday Rental Properties

From April 2025, the Furnished Holiday Lettings (FHL) tax regime will end. FHL properties will instead be treated as part of a general UK or overseas property business, affecting individuals, corporations, and trusts. Key changes include:

  • Pensions: FHL income can no longer count toward pension relief.
  • Loan Interest: Tax relief on residential property loan interest will be limited to 20%.
  • Capital Allowances: Relief on new plant and machinery will no longer apply; instead, businesses can claim for replacement items.
  • Capital Gains: FHL properties will lose special capital gains tax reliefs, including roll-over relief.
  • Losses: Unused losses can be carried forward to offset future property business profits.

Business rates

For 2025/26, eligible retail, hospitality and leisure (RHL) properties in England will receive 40% relief on their business rates liability. RHL properties will be eligible to receive support up to a cash cap of £110,000 per business.

For 2025/26, the small business multiplier in England will be frozen at 49.9p. The standard multiplier will be increased to 55.5p.

Creative sectors

Starting 1 April 2025, enhanced tax reliefs will be available for UK-based film, TV, and cultural productions:

  • Film and High-End TV: A 39% Audio-Visual Expenditure Credit (AVEC) applies to UK visual effects (VFX) costs, exempt from the 80% cap on qualifying expenses. Eligible costs begin from 1 January 2025.
  • Independent Films: Films with budgets under £15 million and a UK lead writer or director can claim a 53% AVEC rate.
  • Theatre, Orchestra, and Exhibitions: Tax relief rates will be 40% for non-touring productions and 45% for touring and orchestra productions, available across the UK.

Miscellaneous

  • From 30 October 2024, the government will close loopholes allowing untaxed fund extraction from close companies and align tax consequences for alternative and conventional financing. Additionally, from April 2026, stricter charity tax rules will be introduced to prevent abuse, ensuring tax relief is only provided as intended.
  • Starting 1 November 2024, the Energy Profits Levy (EPL) on oil and gas production will increase from 35% to 38% and extend until 31 March 2030. The EPL’s Investment Allowance will be removed, and the Decarbonisation Investment Allowance reduced to 66%. In early 2025, the government will consult on managing price shocks after the EPL concludes.
  • The government will implement the Undertaxed Profits Rule, part of the G20-OECD Global Minimum Tax, from 31 December 2024. It will also abolish the Offshore Receipts in Respect of Intangible Property rules for income from that date. Amendments will be made to the Multinational and Domestic Top-up Tax legislation.