As a professional dog walker or self-employed individual in the UK, staying on top of financial and tax updates is crucial for managing your business effectively. Below, we outline key changes coming in 2025 that could impact your finances and tax obligations, with helpful links to authoritative sources.

Basis Period Reform

What Is Basis Period Reform?

From the 2024/25 tax year, self-employed individuals, including sole traders and partners, are required to report their profits based on the tax year (6 April to 5 April), regardless of their business’s accounting period. This replaces the previous system, where profits could be reported based on a business’s unique accounting year.

Implications for Dog Walkers

• If your business uses an accounting period that does not align with the tax year, you may need to apportion profits to fit the new tax year framework.
• Transitioning to the new system may result in overlapping profits being taxed in the 2023/24 tax year, though there will be tax relief available for this overlap.

Source: GOV.UK

Cash Basis Becomes Default for Small Businesses

What Is the Cash Basis?

Starting in 2024/25, the cash basis becomes the default method for small businesses, such as professional dog walkers, to calculate their taxable income. Under this system, income and expenses are reported when money is received and paid, rather than when invoices are issued or bills are incurred.

Benefits of the Cash Basis

• Simplifies record-keeping by eliminating the need to account for outstanding invoices or unpaid bills.
• Useful for managing cash flow, as tax liability aligns more closely with actual cash movements.

Who Can Use the Cash Basis?

This applies to sole traders and partnerships with an annual turnover of up to £150,000. Businesses can opt out if they prefer the accruals method.

Source: GOV.UK

National Insurance Contributions (NICs)

Changes to Class 2 NICs

For the 2025/26 tax year, Class 2 NICs, which are contributions paid by self-employed individuals, will likely see a threshold adjustment. While details are pending, this could affect eligibility for certain benefits and the amount you need to contribute to qualify for a full state pension.

Staying Informed

Keep an eye on updates from HM Revenue & Customs (HMRC) to understand how changes to NIC thresholds could impact your contributions.

Source: GOV.UK

Digitalising Tax Processes

Making Tax Digital (MTD) for Income Tax

The rollout of Making Tax Digital (MTD) continues into 2025. This initiative requires self-employed individuals earning above £50,000 annually to submit their tax returns digitally via MTD-compatible software.

Key Requirements

• Maintain digital records of income and expenses.
• Submit quarterly updates to HMRC.

Professional dog walkers should ensure they have the right software in place and become familiar with digital tax filing.

Source: GOV.UK

Local Tax Changes

While national tax regulations apply to all self-employed individuals, some local councils may introduce additional business rates or licensing requirements. Professional dog walkers should check with their local authorities to confirm any additional tax obligations.

By understanding and preparing for these changes, you can better manage your business and remain compliant with tax regulations. For further details, visit the provided links or consult a qualified accountant.