The Chancellor’s Budget 2025 has arrived, bringing a mix of tax freezes, rate changes and tougher compliance rules. But the real question for most people isn’t what has changed, but how those changes affect you, based on whether you’re a sole trader, in a partnership, or running a limited company.

At Worthwhile Accountancy, we work with all three structures every day, from Norfolk-based tradespeople and landlords to professional partnerships and limited companies across East Anglia. Below, we’ve broken down the key Budget 2025 changes by business type, so you can see what matters for your setup and what to do next.

Sole Traders: Threshold Freezes, MTD and Asset Income

For sole traders, much of the impact of Budget 2025 comes from what hasn’t moved, namely, the tax thresholds.

Income Tax & NIC Threshold Freeze

The government has confirmed that:

  • The Personal Allowance, and
  • The main National Insurance contributions (NICs) thresholds

will remain frozen at their current levels until April 2031.

What this means in practice:

  • Your headline tax rates haven’t gone up
  • But as your income increases with inflation and price rises, more of it can be dragged into higher tax and NIC bands
  • This effect is known as “fiscal drag”, gradually increasing your overall tax burden over time

Making Tax Digital (MTD): A Soft Landing, But Still Coming

If you’re preparing for Making Tax Digital for Income Tax Self Assessment (MTD for ITSA), Budget 2025 confirmed a helpful transitional measure.

From April 2026, many sole traders will be required to:

  • Keep digital records, and
  • Submit quarterly updates via MTD-compatible software

For the 2026–27 tax year, Budget 2025 confirms:

  • No late submission penalties will apply to those quarterly updates
  • But penalties can still apply if you miss your final annual declaration

So you still need to get your systems in order, but there’s some breathing space while you adjust.

Our tip: Use this “soft landing” year to get comfortable with digital record-keeping instead of leaving everything to the last minute.

  • Need help with MTD, Self Assessment or bookkeeping?
    Visit our Sole Traders page to see how we can support you.

Savings & Property Income: Higher Rates from 2027

If you rely on income beyond your trade, for example, rent or investments, Budget 2025 includes further changes:

  • Property Income: From April 2027, separate tax rates for property income will be introduced, rising to 22% (basic), 42% (higher) and 47% (additional).
  • Savings Income: From April 2027, tax rates on savings income will also increase by 2 percentage points across all bands.

If you are both a sole trader and a landlord or investor, it will be more important than ever to plan how your trading profits, rental income and savings income interact.

Limited Companies: Capital Allowances, Penalties & Dividends

For limited company directors, Budget 2025 blends investment incentives with a firmer stance on compliance and dividend tax.

Corporation Tax & Capital Allowances

The main Corporation Tax rate stays at 25%, but the way you get relief on capital expenditure is changing:

  • Writing Down Allowances (WDA):
    • Main rate WDA will reduce from 18% to 14% from 1 April 2026
  • New First-Year Allowance (FYA):
    • A new 40% First-Year Allowance for main pool expenditure will apply from 1 January 2026

What this means:

  • There’s now a stronger incentive to invest in qualifying assets at the right time
  • You’ll get more upfront relief on eligible purchases under the FYA, with slower relief via WDA later

Tougher Late Filing Penalties

From 1 April 2026, late filing penalties for Corporation Tax returns will be doubled.

If you’re used to cutting it close with Companies House and HMRC deadlines, this will:

  • Increase the cost of being late
  • Make timely filing and good organisation more important than ever
  • Want peace of mind on compliance and deadlines?
    Our Limited Companies service ensures your statutory accounts and CT returns are filed correctly and on time.

Dividend Tax Rate Increases

If you’re a director who takes income via dividends, Budget 2025 further narrows the gap between dividend and salary tax:

From 6 April 2026, dividend tax rates will rise by 2 percentage points:

  • Ordinary rate increases to 10.75%
  • Upper rate increases to 35.75%

This makes remuneration planning more nuanced:

  • You may want to review your salary vs dividend mix
  • Pension contributions, benefits and other planning tools may become more relevant

We can help you rethink your director’s remuneration strategy in light of these changes.

Partnerships: Threshold Freezes & Property-Focused Changes

For partnerships, much of Budget 2025’s impact flows through to the individual partners.

Because partners are taxed personally on their share of profit:

  • The freeze on Income Tax thresholds until 2031 will also affect your personal tax bills
  • As profits grow, more partners may drift into higher tax bands over time

If your partnership:

  • Holds rental properties, or
  • Generates significant asset income

then the upcoming property income tax rate changes from April 2027 – up to 42% for higher-rate taxpayers – will be particularly relevant.

  • Looking to keep your partnership tax-efficient?
    Explore our Partnerships services to review profit sharing, drawings and personal tax planning.

Employers (All Business Structures): Rising Wage & NIC Costs

No matter whether you’re a sole trader with staff, a partnership, or a limited company, if you employ people, Budget 2025 will affect your payroll costs.

Key changes include:

  • National Living Wage:
    • From April 2026, the National Living Wage will increase by 4.1% to £12.71 per hour
  • Employer NIC – Secondary Threshold:
    • The Secondary Threshold, where employer NICs start, is frozen at £5,000 until April 2031

As wages rise over time, while the threshold is frozen:

  • A bigger share of your wage bill will be subject to employer NIC
  • Your total cost of employment will increase

Salary Sacrifice & Pensions

If you offer salary sacrifice for pension contributions:

  • From April 2029, employer NICs will apply to pension contributions made via salary sacrifice above £2,000 per year

This will affect:

  • The net benefit of salary sacrifice arrangements
  • How you structure pension contributions for key staff and directors

Our payroll and tax planning services can help you model the impact and adjust your benefits strategy.

A Common Theme: More Compliance, More Planning

Across sole traders, partnerships and limited companies, Budget 2025 has a clear theme:

“More emphasis on compliance, digital reporting and tightening up how different types of income are taxed.”

In particular:

  • Threshold freezes mean gradual tax rises even without headline rate hikes
  • MTD for ITSA will reshape how sole traders and landlords keep records and file
  • Limited companies face higher penalties for late Corporation Tax returns
  • Asset income (property and savings) will be more heavily taxed from 2027
  • Employers in all structures will see wage and NIC costs continue to rise

The right response depends heavily on your structure and future plans. That’s where tailored advice makes a real difference.

Not Sure Where You Stand? We Can Help

Whether you are:

  • A Sole Trader trying to get ready for MTD
  • A partner in a Partnership working out how property income changes affect you
  • A Limited Company director reviewing dividends, salaries and investment plans

Worthwhile Accountancy can help you understand what Budget 2025 means for you and build a plan around it.

You don’t have to interpret every paragraph of the Budget – that’s our job.

Contact us today or call 01842 646441 for a clear, jargon-free chat about your business structure and tax planning.