Last Updated on 30/09/2025 by Adrian Lamb
Best tax savings for SME’s in 2025
Key Updates SMEs Need To Know For 2025/26
This year, there are a few important changes that small business owners and self-employed professionals should be aware of. Staying informed helps you plan better and take advantage of any new opportunities – or mitigate risks. Here’s a closer look at the updates for 2025/26.
National Insurance Cuts For The Self-Employed
One of the biggest changes is the abolition of Class 2 National Insurance contributions for the self-employed. From April 2025, sole traders with profits over £12,570 will no longer need to pay this flat weekly charge, but they will still receive access to contributory benefits such as the State Pension. While this simplifies things, it may also affect how self-employed individuals manage their National Insurance history and entitlement to future benefits.
Corporation Tax Bands
Corporation Tax remains at 25% for companies with profits above £250,000. Businesses earning under £50,000 continue to benefit from the small profits rate of 19%. Profits that fall between these figures are subject to marginal relief, which means your effective tax rate will gradually increase depending on how much profit you earn. It’s more important than ever to understand where your business sits within these bands.
Businesses must pay several different taxes, from Corporation Tax and Income Tax to VAT. Without careful accounting, these tax liabilities can negatively impact your smaller business’s bottom line. The tax your business will need to pay depends on several factors, including how it is set up and whether you have employees. Many smaller companies, however, can benefit from tax relief, depending on their business activities and circumstance. For example, you may pay less tax or can claim rebates against activities such as money spent on research and development if your business specialises in innovation.
Other tax relief schemes, such as accounting for 100% of the cost of purchasing a new electric vehicle against company profits, can reduce the corporation tax your business needs to pay. Reducing your tax liability can be a helpful way to ease financial pressure, and you can use the extra cash to help grow the business. It can be a good idea to seek professional financial advice from an independent financial advisor or accountant to identify what tax breaks are available for your business.
Small Business Rate Relief
Many businesses are charged a business rate by the local council. Small business rate relief (SBRR) is a tax break depending on the rateable value of your business property or premises. You may be eligible for the relief if your premise’s rateable value is less than £15,000 and if you only use one property for your business − although you may still be able to claim some relief if you have multiple properties. You will not need to pay business rates if your business property has a rateable value of £12,000 or less.
Between £12,001 and £15,000, the relief is on a sliding scale from 100% to 0%. Find out more about SBRR and contact your local council to apply for the relief.
Employment Allowance (National Insurance relief)
As an employer, you may be able to reduce your National Insurance bill by up to £5,000 a year by claiming Employment Allowance. This means you pay less employers’ Class 1 National Insurance each time you run your payroll until you reach the £5,000 threshold or the tax year ends, whichever is sooner. From April 2025 the threshold will be £10,500. You can claim Employment Allowance if you’re a business or a charity with employers Class 1 NI liabilities of less than £100,000 in the previous tax year. From April 2025, the £100,000 limit will no longer apply.
Annual Investment Allowance
Annual Investment Allowance (AIA) allows you to deduct the costs of plant and machinery, from your business profits before paying tax. You can claim only up to a certain amount.
Items you can claim include:
- items you keep using in your business, such as computers
- integral features – parts of a building considered integral include as lifts, lighting and heating systems.
- some fixtures, for example, staff bathrooms and canteen facilities.
- You can also claim AIA for business vans but not for business cars which can be covered by other allowances.
At O’Boyle Accounting we make sure you are doing things the most efficient and practical way – we ask the right questions! If you run a small business and think you may be entitled to a tax refund or if you want to reduce your tax bill and you need any practical help with preparing Accounts / Tax returns and / or Quickbooks training, please contact us!
