A number of changes to business regulations affecting larger and smaller companies, employers and employees have come into effect in April, and looking further ahead, more are set up for the near future with the advent of the Employment Rights Bill. Smaller companies with one employee will benefit from the more than doubled employment allowance in April 2025, but there is a raft of changes that may require some adjustments.
For the first time from April 2025 parents of new-borns who require hospital care within 28 days of their birth will be able to take up to 12 weeks of leave, with those who have been employed for more than 26 weeks entitled to neonatal care pay. While some employers were already sympathetic to parents’ needs during this stressful time, formalising the arrangement will allow all parties to know where they stand and smaller employers will be reimbursed 108% of the cost.
More widely, the forthcoming Employment Rights Bill, likely to come into force in 2026, tackles the sometimes problematic arrangements surrounding zero-hours contracts. Often seen to be favourable to the employer, with no legal right to a consistent amount of work and little notice for available shifts, employee rights will be improved, with a guaranteed number of hours for the worker, and pay for shifts that are cancelled last minute.
Employee benefits in terms of company car arrangements are no longer so beneficial for drivers who choose electric or hybrid vehicles. Set at 1% in 2020 for electric cars and hybrids with a 130+ electric-mile range, the rates have only risen to 3% since then but between now and 2028 the tax rate will triple for electric cars. Owners of the most-efficient hybrids will have the biggest hike, with the rate rising from 5% in 2027/28 to 18% in 2028/29. The hike is due to the removal of the range brackets, putting all hybrid cars at the higher percentage.
Small businesses and sole traders earning £50,000 and above in 2024/25 will need to be prepared to comply with the government’s Making Tax Digital (MTD) programme from April 2026. This cohort are required to use MTD-compliant software to create seamless digital reporting from their accounts to the government portal. Two more compliance waves will follow, with those earning over £30,000 due to comply from April 2027 and over £20,000 in 2028.
If the warmer weather is leading your thoughts towards relocating abroad in older age, there is good news for those mindful of the inheritance tax (IHT) rules. IHT charges were previously linked to the number of ties a person had to the UK as well as the years they had been away from the UK, but that system has now been simplified so only years of residence in the new country, in conjunction with the years spent in the UK, are used to calculate IHT owed.
We discuss these issues and other stories in our latest Summer 2025 newsletter.