Happy new tax year 2025
Think tank: Resolution Foundation
Author(s): Adam Corlett; Lalitha Try
April 3, 2025
This report from UK think tank the Resolution Foundation looks at tax, utility bill and social security changes in April 2025.
April is always a month of tax changes, and this year, two stand out in their impact on the public finances: the rise in employer National Insurance, and the continuing freezing of the Income Tax personal allowance and higher rate threshold.
But the impact on pay packets will be subtle: the former won’t have any direct impact on employees, but is likely eventually to lead to lower wage growth than would otherwise have happened, and the latter will show up as a rise in average effective tax rates when someone gets a pay rise.
Nonetheless, the combined impact this year is estimated to be lower income of around £170 for a typical household relative to an all-else-equal world of no tax rises.
The rise in Council Tax will be smaller, if leading to a more noticeable change in headline bills, with a rise for the typical household of £80 a year in cash terms – with increases of 5 per cent across most of England, similar in Northern Ireland, 7 per cent in Wales and 9 per cent in Scotland.
This is part of an ongoing trend of Council Tax rising faster than inflation, which has taken this revenue to its highest ever share of GDP outside of the pandemic.
