April Tax Changes: What’s Increasing & What’s Staying the Same

Spring is here and along with the daffodils blooming, a fresh set of tax changes is sprouting up, too. From higher wages to steeper property taxes, April brings tax updates that could hit your wallet, whether you are a first-time homebuyer, a business owner or just trying to keep up with the cost of living.

Here is everything you need to know to stay ahead.

Stamp Duty’s Back to Normal & It is Going to Hurt

Remember those temporary stamp duty cuts that made buying a home a bit less painful? They are now a thing of the past. From 1 April:

• The threshold for paying Stamp Duty Land Tax (SDLT) has tanked from £250,000 to £125,000, meaning more buyers will get caught in the tax net.
• First-time buyers also lose out: their threshold has fallen from £425,000 to £300,000, and the maximum property value that qualifies for relief has shrunk from £625,000 to £500,000.

This isn’t just bad news for homeowners, though. Property investors are also facing the full force of the higher stamp duty surcharge, making buy-to-let deals even less appealing.

Investing in residential property is now one of the least tax-efficient options out there, experts warn.

Holiday Lets Lose Their Tax Perks

If you have been renting out a furnished holiday let (FHL), the taxman has closed a loophole.

From 1 April (6 April for individuals, trusts and partnerships), FHLs are taxed the same way as long-term rentals, stripping away beneficial capital allowances and existing reliefs. Analysts say the golden era of tax breaks for holiday lets is over.

CGT: No Reprieve But No Pain Either

The higher Capital Gains Tax (CGT) rates announced last autumn are now in full swing -- 18% for basic-rate taxpayers and 24% for higher and additional-rate payers.

The good news is that the temporarily discounted 24% rate on residential property sales (introduced last year) wasn’t axed in March as feared and rates stay equal across assets for now.

But landlords and second-home owners aren’t off the hook. They have to pay an extra 5% SDLT premium when buying.

Minimum Wage Rises

At least workers are getting a break. The National Minimum Wage jumped 6.7% from 1 April, with the National Living Wage (for those 21+) jumping to £12.21 an hour (up from £11.44).

Younger workers also see gains:

• 18-20-year-olds - £10/hour (up from £8.60)
• Under-18s & apprentices - £7.55/hour

Two years ago, the National Living Wage was just £10.42; although the rise is welcome, it is still playing catch-up with inflation.

Corporation Tax & Dividends

Businesses did not see any major shocks:

• Corporation tax stays at 25% (or 19% for firms with profits under £50k).
• The full expense allowance (giving companies up to 25% tax relief on big investments in machinery) is now permanent.
• Dividend allowance kept at a measly £500, with tax rates unchanged (8.75% for basic rate, 33.75% higher, 39.35% additional).

Conclusion

April’s changes bring a mix of pain and relief. Workers get a long-overdue pay bump, although property buyers and investors are hit with heavier tax bills.

The key takeaway from all this is that you should plan ahead in case you are thinking of buying a home, renting out a property or running a business.

"Tax does not have to be taxing," as the old HMRC slogan goes. But with all those changes, it is sort of getting harder to keep up.