The defining events of 2025 for accountants and bookkeepers
The defining events of 2025 for accountants and bookkeepers
AAT and accountants give their opinions on the significant events coming up this year that you should be aware of.
It’s likely to be an interesting year for UK businesses. With the new Labour government entering its first full calender year after six months in power, and Donald Trump’s second presidential term, new policies and legislation – both nationally and internationally – are likely to affect businesses.
In April, employers’ National Insurance Contributions (NICs) will increase from 13.8% to 15%, while the threshold for eligibility to pay NICs will decrease from £9,100 to £5,000.
Meanwhile, KPMG predicts that UK inflation could ‘average’ around 2.4% throughout 2025 with businesses passing price increases onto customers and clients.
And national media have reported on a Bank of England interest rate ‘dilemma’ due to expected ‘inflationary pressures’.
The risk of higher trade tariffs in the United States could affect UK businesses that have a client or customer base there.
But it’s not all bad news for businesses. Larger numbers of SMEs will benefit from an expanded Employment Allowance scheme from April. This was initially introduced in 2014 to encourage smaller businesses to increase their workforce by reducing their NIC liabilities.
Under the latest changes, the £100,000 Class 1 National Insurance liability threshold has been scrapped, enabling more businesses to meet eligibility criteria, and the maximum allowance has been increased from £5,000 to £10,500.
Defining events of 2025 which are likely to impact businesses therefore may include:
- 6 February 2025 Bank of England interest rate changes – it’s been rumoured the Bank of England will cut interest rates four times during 2025
- rising inflation
- 26 March Rachel Reeve’s Spring Forecast
- April implementation of Employment Allowance changes
- 2025 Autumn Budget.
So what do accountants think? We asked accountants and bookkeepers for their views on what could be the significant events of 2025.
Policy and public affairs events that AAT is keeping an eye on
January
- Department for Business and Trade expected to publish consultation on late payments (previously expected before Christmas)
- Interim report of Government’s Curriculum Review expected to be published (Reference to this being published in the ‘New Year’ here)
February
- Consultation expected on options to enhance HMRC’s powers and sanctions to take action against tax advisers who facilitate non-compliance (Budget document committed to publishing this in ‘early 2025’)
- Consultation expected on measures to tackle promoters of marketed tax avoidance (Budget document committed to publishing this in ‘early 2025’)
- Consultation expected on measures to modernise how HMRC acquires and uses third-party data to make it easier for taxpayers to get tax right the first time (Budget document committed to publishing this in ‘early 2025’)
- SME Digital Adoption Taskforce to publish interim report (Budget document committed to publishing this in ‘early 2025’)
March
- Chancellor’s statement on Spring economic forecast (Confirmed for 26th March)
April
- Many tax measures announced in October 2024 Budget come into effect, including Employer NICS, Inheritance Tax, non-dom and capital gains changes (6th April)
- Tax Administration and Maintenance Day (Date TBC, last year it was on 18th April 2024)
May
- Likely announcement of Government Spending Review (Government has committed to publishing ‘in the Spring’)
- Expected outcome of consultation on effectiveness of AML regulations (Officials indicated to AAT that this would be published in ‘Spring 2025’)
July
- Skills England expected to become fully operational (Likely mid-July – Government previously committed to 12 month timetable beginning July 2024)
- Publication of HMRC’s Annual Report (Typically published annually in mid-late July)
September
- Liberal Democrat conference (beginning 20th September)
- Labour Party conference (beginning 28th September)
- Technical consultation on HMRC agent registration legislation expected to be published (Ministers confirmed this will be published ‘ahead of Budget 2025’ here)
October
- New measures on prompt payments come into effect, requiring companies bidding for large government contracts to pay suppliers within 45 days (1st October)
- Conservative Party conference (beginning 5th October)
- Autumn Budget (No date confirmed but the Chancellor has committed to one fiscal event per year and previous Budget was on October 2024).
Tax changes will define 2025, but their impact can be lessened
Graeme Hills, Head of Tax at Duncan & Toplis
Upcoming tax changes in April are certainly set to define 2025 from a business perspective, and the change with the biggest impact will likely be the employer National Insurance hikes.
With employer NICs increasing to 15% and the secondary threshold almost halving to £5,000, finance departments across the country face an administrative and financial challenge.
Some businesses will need to think hard about how many employees they can afford. Payroll is one of the biggest costs for many businesses, so paying out more in National Insurance, which adds costs without resource, could seriously affect cash flow and profits.
To try and reduce this impact, businesses should look for ways to reduce overheads in different areas. For example, are suppliers still offering competitive pricing? Could upgrades such as energy-efficient machinery or technology reduce expenses? And is inventory management optimised to minimise waste?
Conducting strategic cost reviews can uncover opportunities to improve margins and build resilience, helping to lessen the impact of tax increases and ensure profitability in 2025.
Verdict: Tax changes will be substantial, but businesses can take steps to reduce the effects.
Trump’s tariffs could affect UK businesses
Andrew Moss, partner, DSG Chartered Accountants
Two major events are set to have a significant impact on UK businesses in 2025. The October budget introduced policy changes that will affect many UK companies, while the first year of President Trump’s second term brings uncertainty, given his unconventional style and propensity for issuing executive orders.
In the context of the budget, many businesses and business lobby groups have voiced concerns about both the increase in employers’ NICs and the rise in the National Minimum Wage (NMW).
While smaller employers will be shielded from the NI increase by the employer allowance rising to £10,500, larger employers will face higher costs due to a lower threshold – adding roughly £600 per employee – on top of the rate increasing to 15%. This combination of measures will likely affect hiring decisions, wage increases, and could even prompt some businesses to reduce staffing.
President Trump on the other hand has raised the spectre of tariffs on imported goods in a bid to protect the American economy and manufacturers. We don’t yet know whether this will impact UK manufacturers, those supplying goods directly to the US or supplying other countries who, in turn, supply to the US and therefore may be hit by increased tariffs. Uncertainty causes unease and UK business needs a degree of certainty in order to make long investment decisions which boost growth.
Verdict: The impact of last year’s budget and Trump’s imported goods policy are likely to impact UK businesses this year.
Rising inflation will remain a concern for businesses
Ben Steele, certified chartered accountant, Streets Chartered Accountants and founder, ViFi
As we head deeper into 2025, inflation remains a pressing issue for UK SMEs. With the Office for Budget Responsibility (OBR) forecasting an average inflation rate of 2.6% this year, the knock-on effect for business costs is unavoidable. Everything from raw materials to utility bills is going up, and it’s no surprise that 42% of business owners say rising running costs are their biggest concern for the year ahead.
What’s particularly worrying is the projected financial hit SMEs could face. With inflation pressures combined with tax increases, businesses are looking at an estimated average loss of £138,000 each. For many, that’s a serious blow to their bottom line and potentially their long-term survival.
But it’s not all doom and gloom. SMEs can take steps to ease the pressure such as reviewing costs, renegotiating with suppliers and making adjustments to pricing.
It’s also vital to keep an eye on government policy updates and tap into professional financial advice to stay ahead of the curve. The resilience of SMEs has been tested time and again in recent years, and while 2025 won’t be easy, businesses that act proactively stand a much better chance of weathering the storm.
Verdict: Rising inflation will remain an overarching concern for many this year.
US leaving the minimum taxation global agreement could be controversial
Kevin Hindley, Partner and Head of Corporate Tax at Andersen LLP
On 20 January, President Trump issued a memorandum that effectively pulls the US out of the global agreement on minimum taxation as put forward by the OECD.
The current proposal is to tax multinational companies that have subsidiaries with an effective rate of tax lower than 15% to bring in a minimum level of taxation – but more importantly from a US perspective, the proposal can lead to the income of US companies earned in the US being subject to tax in other countries.
President Trump’s broadside puts in doubt the ability of other countries to implement such a plan and receive favourable treatment from the US. This will be highly interesting for the UK, where the legislation has been partly implemented already. The most controversial part of this, the Undertaxed Profits Rule, is also currently undergoing Parliamentary scrutiny as part of the current Finance Bill. We will see whether UK lawmakers blink first.
Watch this space – Trump’s memorandum instructs the Treasury to provide recommendations regarding potential countermeasures within 60 days.
Verdict: Trump’s decision to remove US from minimum taxation global agreement could be controversial.
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