Greater Manchester Businesses & The 25/26 Tax Year
With the new tax year just around the corner, business owners in Greater Manchester need to know what new legislations are coming into force and how they may affect their SME businesses. This guide from Graham Wood will explain every change affecting your business and what action, if any, you need to take. Competent tax planning for Greater Manchester businesses is crucial for the 25/26 tax year, particularly considering the upcoming changes. This includes the government’s plan to make changes to the rules surrounding National Insurance contributions, statutory payments, the employment allowance, asset disposal relief, and company size thresholds.
Increased Employers’ National Insurance Contributions
From 6th April 2025, the employers’ National Insurance (NI) rate will rise from 13.8% to 15% – a 1.2% increase. This means higher employment costs for businesses and particularly, in proportional terms, SMEs.
Additionally, the secondary threshold—the earnings level at which employers start paying National Insurance contributions—will decrease from £9,100 to £5,000. This means employers will need to pay NI on a significantly larger portion of their employees’ wages, increasing their payroll costs overall.
Small businesses are likely to be hit hardest by these changes. So, it’s important for business owners across Manchester and beyond to factor in the increased costs ahead of time.
Regardless of your business’s size, we strongly recommend reviewing your salary structures to prepare for these changes. For small businesses, it’s crucial to factor in the increase in the Employment Allowance to £10,500, as this helps offset some of the additional NI costs. With careful planning and sound advice, you can navigate the changes and ensure your financial stability. And, more importantly, your peace of mind.
At Graham Wood, our business planning specialists are happy to help with your tax planning and bookkeeping, taking proactive steps to ensure your business stays efficient and proficient. So, get in touch today to prepare for the changes ahead.
Increased Employment Allowance
Small businesses will benefit from the increase in the Employment Allowance. As mentioned previously, this helps reduce your National Insurance liabilities. From April 2025, this allowance will rise from £5,000 to £10,500, providing additional relief to eligible businesses.
So, even though employer NI contributions will increase due to the lower secondary threshold, the higher Employment Allowance will offset some of these additional costs.
Increased Statutory Sick Pay & Parental Pay
From April 2025, the weekly entitlement for statutory payments will increase from £184.30 to £187.18 per week. This applies to:
- Statutory Maternity Leave
- Statutory Paternity Leave
- Statutory Adoption Leave
- Shared Parental Leave
- Parental Bereavement Pay
The statutory sick pay rate is also set to increase from £116.40 per week to £118.75 on April 6th 2025.
It’s essential to review and update your policies and payroll systems to ensure they remain compliant with these changes. If you need assistance with updating your payroll systems and policies, our Hyde-based accountants offer tailored support to ensure whatever shape or size your business may be, it’s operating compliantly and efficiently.
Increased ‘Company Size’ Thresholds
Make sure you’re aware of the changes to the company size thresholds too. These have been updated for the 25/26 tax year to be more accurately aligned with inflation and economic growth. These thresholds are determined by turnover, number of employees, and balance sheet totals. They impact your eligibility for benefits, reliefs, and compliance requirements.
If your business is on the cusp of moving to a different category (e.g., from a small business to a medium-sized business), you may be affected by these changes. It’s essential to review the new thresholds, assess whether your business has moved into a new category, and update your compliance processes to ensure you meet the regulations for your new classification.
| Company Size | Turnover Limit | Limit for Balance Sheet Total | Maximum Number of Employees |
| Mirco | £1m
(previously £632,000) |
£500,000
(previously £316,000) |
10
(no change) |
| Small | £15m
(previously £10.2m) |
£7.5m (previously £5.1m) | 50
(no change) |
| Medium | £54m
(previously £36m) |
£27m (previously £18m) | 250
(no change) |
For some local and trustworthy advice, get in touch with the Graham Wood team, or drop in to our offices on Market Street. Our Hyde-based accountants have over 70 years’ experience with business planning – making sure businesses are performing compliantly.
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Increased Business Asset Disposal Relief
From April, the business asset disposal relief (formerly known as Entrepreneurs’ Relief) rate will increase from 10% to 14%. This means a higher tax rate on qualifying disposals. Therefore, if you are thinking of closing your business or selling assets, it could be financially advantageous to do this before April.
Looking ahead, the relief rate will increase again in April 2026. The lower rate of Capital Gains Tax (CGT) on qualifying disposals will rise from 14% to 18%. Meanwhile, the higher rate will jump from 20% to 24%.
If you’re planning to sell business assets, shares, or close your business, acting sooner rather than later could help you avoid a higher tax liability. Get in touch with Graham Wood today to discuss your options and plan accordingly.
Drop in Business Rates Relief
If you own a Retail, Hospitality or Lesure (RHL) business, you need to be prepared for a significant reduction in business rates relief. During the 24/25 tax year, eligible businesses received a 75% rate or business rate relief. This was capped at £110,000 per business. While the cap will remain the same, the relief rate will drop to 40% from 6th April 2025.
This means higher business rates bills for RHL businesses in 25/26. So, it’s crucial to budget accordingly to account for the additional costs. Some businesses may still qualify for additional relief from local authorities, so we recommend getting in touch with your local authority to explore any potential support available. If you have any questions, though, give us a shout.
Other changes in April
Another key change you should be aware of is the increase in the National Living Wage and National Minimum Wage. This change will take effect before the new tax year on 1st April 2025.
For worker over the age of 21, the National Living Wage will rise to £12.21, from £11.44. For workers between the ages of 18 and 20 years old, the National Minimum Wage is also set to rise from £8.60 to £10 per hour.
| Wage Band | Rate 1st April 2024 – 31st March (per hour) | Rate from 1st April 2025
(per hour) |
| Apprentice | £6.40 | £7.55 |
| Under 18 | £6.40 | £7.55 |
| Aged 18-20 | £8.60 | £10 |
| Age 21 or over (National Living Wage) | £11.44 | £12.21 |
With increased payroll expenses, it’s crucial to factor these changes into your budgeting and financial planning. Our accountants can assist with tax planning and business planning to help you prepare for the upcoming wage increases. Get in touch with our team today to ensure your business is ready for the new tax year.
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Preparing for the upcoming UK Tax Changes
If you own a small business, you need to be prepared for the changes coming into effect in April. By understanding these changes and following sound, professional advice, you can ensure your business is operating compliantly and efficiently – avoiding any unwanted surprises.
As a trusted local partner for businesses in Tameside and Manchester, we’re here to help keep your business efficient and thriving. If you have concerns about the latest tax changes affecting businesses in the UK, then speak to our business planning experts as soon as possible.
Get ahead with your Business & Tax planning with Manchester’s Business Accountants of Choice since 1950.
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