“Change” was the mantra of Keir Starmer’s Labour Party, as it went on to achieve a landslide victory and one of the largest majorities in UK political history.
Faced with the realities of a budget deficit, and with the party’s hands tied by pledges not to raise taxes on “working people”, some have questioned if the new Labour government can really deliver the national transformation it promised.
Such large-scale change will inevitably take some time, however, there are some new pieces of legislation coming into effect in 2025 you should know about.
Crackdown on non-doms
As part of chancellor Rachel Reeves’ first budget in October, the rules on taxation of people with “non-domicile” status will be changed as of 6 April next year.
‘Non-domicile’ or ‘non-dom’ is a term for a UK resident whose permanent home, or domicile, is based outside the UK. They only pay UK tax on money that they earn in the UK, meaning they do not have to pay tax in the UK on money they make anywhere else in the world – providing the money is not paid into a UK bank account.
One notable person with non-dom status who caused public outcry when their tax status was revealed was then-UK chancellor Rishi Sunak’s wife Akshata Murty, saving millions.
However, in 2022 Murty said that it had become clear that there were many who believed it was not compatible with her husband’s position in charge of the nation’s finances and that would pay UK taxes on all her worldwide income.
Then in March 2024, Tory chancellor Jeremy Hunt announced that non-dom status would be phased out gradually.
However, Labour is going even further and abolishing it completely. It will be replaced it with a residence-based tax regime, that Reeves says will raise £12.7bn over the next five years.
The Renters’ Rights Bill
The Renters’ Rights Bill aims to introduce several new protections for renters, most crucially, a ban on no-fault evictions under Section 21 (S21) of the 1988 Housing Act.
The bill scraps fixed-term tenancies and replaces them with periodic tenancies, which tenants can end with two months’ notice.
It makes it illegal for landlords and agents to discriminate against prospective tenants who have children or are on benefits, and forbids them from accepting rental offers above the advertised price.
Protesters rallying against soaring rents at a demonstration organised by the London Renters Union in December. (Alamy)
The bill introduces a ‘decent homes standard’ for the private rented sector, a new ombudsman for landlords and tenants in England, a mandatory database for all private landlords, and a requirement to address hazards such as damp and mould within a specified time period.
If passed, it is not clear when each element of the bill will come into effect, but the government told the BBC it hopes to have the no-fault eviction ban in place by summer 2025.
The Tobacco and Vapes Bill
In a bid to create a “smoke-free generation”, the Tobacco and Vapes Bill prevents anyone born after 1 January 2009 from legally smoking by gradually raising the age at which tobacco can be bought (currently 18) by one year every year.
It also includes powers to introduce a licensing scheme for retailers to sell tobacco, vape, and nicotine products in England, Wales, and Northern Ireland, with shopkeepers found selling to underage children facing on-the-spot fines of £200.
The Tobacco and Vapes Bill prevents anyone born after 1 January 2009 from legally smoking by gradually raising the age at which tobacco can be bought (currently 18) by one year every year. (In Pictures via Getty Images)
The bill restricts sweet vape flavours and will review the packaging of e-cigarettes to reduce their appeal to young people. It includes a total ban on vape advertising and sponsorship and will stop free distribution of vapes and sales of them in vending machines.
Disposable vapes will be banned from June 2025 under separate environmental legislation, while the policy on raising the minimum age to buy tobacco will come into force in 2027.
VAT for private schools
From 1 January 2025, all education and boarding services provided by a private school or connected person will be subject to VAT at the standard rate of 20%.
Pre-payments of fees or boarding services on or after 29 July 2024 relating to terms starting on or after New Year’s Day will also be subject to the standard rate.
The government said it was removing the VAT exemption for private schools to raise revenue for the Treasury and to fund public services, including education for the 94% of children who attend state schools.
Digital Markets, Competition & Consumers Act
New rules designed to protect small businesses online and save shoppers money are coming into effect next year.
The Digital Markets, Competition & Consumers Act 2024 will give the Competition and Markets Authority (CMA) to tackle anti-competitive mergers and will add to the regulator’s list of business practices considered unfair, including submitting or soliciting fake or misleading reviews.
Businesses with higher turnovers, or with a solid foothold in the market, can be assigned “strategic market status”, which will bound them by a bespoke code of conduct aimed at improving consumer benefit and fair trading practices.
The CMA will be able to fine non-compliant businesses up to 10% of their global turnover or £300,000 (whichever is higher). Additional regulations expected from Spring 2026 will tackle so-called “subscription traps” – which are estimated to cost consumers over £1.6bn per year.
New employment rights and benefits
From April next year, the national living wage (for over-21s), which will rise by 6.7% to £12.21 per hour.
Narrowing the gap with younger people, minimum wage rates will rise by 16.3% to £10 per hour for 18-to 20-year-olds, and by 18% to £7.55 per hour for 16- and 17-year-olds.
Statutory sick pay is set to increase from £116.75 to £118.75 per week, according to the government’s website, while statutory maternity pay, maternity allowance, paternity pay, adoption pay, shared parental pay and parental bereavement pay will rise from £184.30 to £187.70 per week.
Benefits linked to inflation will rise by 1.7% in April 2025, while basic and new state pensions will be uprated by 4.1%.
Employers’ national insurance contributions will rise by 1.2 percentage points to 15% from April 2025, while the threshold at which companies start to pay contributions on an employee’s salary will fall from £9,100 to £5,000 per year.
Expanded provision for auto enrolment into pension schemes
Millions of people will be helped in putting more into their pensions under a bill which will see the age at which eligible workers are automatically enrolled into workplace pension schemes lowered from 22 to 18.
The lower earnings limit of £192 per week or £833 per month – the minimum amount someone can earn before being subject to enrolment – will also be removed under the Pensions (Extension of Automatic Enrolment) (No. 2) Bill.
When exactly these reforms will be implemented remains unclear. A new consultation will have to be carried out by the Labour government to agree on a timeline for the changes, which could happen in 2025, the Times reports.
New rights coming into force from April 2025 will allow parents of babies receiving neonatal care up to 12 weeks of paid leave and a minimum entitlement of one week.
Neonatal leave will be a day one right. (Alamy)
The new allowance, under the Neonatal Care (Leave and Pay) Bill, will apply to parents of babies who are admitted into hospital up to the age of 28 days, and have received continuous care for seven days or longer.
Similarly to other forms of parental leave, parents will have to be employed for a minimum of 26 weeks prior to requesting leave, and must be earning at least £123 per week.
Vehicle tax for electric cars
From 1 April 2025, registered keepers of electric, zero or low emission cars, vans and motorcycles will need to pay vehicle tax – the same way as petrol and diesel vehicles.
The new measure removing band A under the existing vehicle excise duty (VED) system, which is currently £0. Vehicles in this band will be required to move to the first band where a rate becomes payable.
The government says it is enforcing this measure “to ensure all drivers begin to pay a fairer tax contribution” – as more people buy electric vehicles.
Online Safety Act
Social media firms, search engines, messaging, gaming and dating apps, and pornography and file-sharing sites will be required to put a range of safety measures in place under the Online Safety Act.
The new rules, expected to come into force from 17 March, are designed to protect users with better moderation, built-in safety tools, clear ways to report harmful content.
The Online Safety Act puts tools in place to limit harmful content online and to take it down faster. (Getty Images)
Sites will be bound by a range of new safety duties, compelling them to protect users from illegal and harmful content.
Ofcom will have the power to fine firms who don’t follow the rules up to £18m or 10% of their qualifying global turnover – whichever is greater – and in very serious cases can apply for sites to be blocked in the UK.
‘Failure to prevent fraud’ to become a criminal offence
New legislation coming into effect next year aims to bring the role of Companies House in line with “modern day challenges”.
The Economic Crime and Corporate Transparency Act 2023 introduces a new corporate criminal offence of “failure to prevent fraud”, which will apply to large companies, non-profit organisations and many incorporated public bodies.
Organisations could be liable if an employee, agent, subsidiary, or other “associated person”, commits fraud intending to benefit the organisation, but they can defend themselves if they can show they had reasonable fraud prevention measures in place.
Easier to take parental leave if partner dies shortly after childbirth
When Aaron Horsey’s wife died during childbirth in January 2022, he learned he did not qualify for any paid parental leave due to a recent job change, despite being his baby’s sole carer.
After raising his concerns, the issue was taken up by MPs, inspiring a private members’ bill, that passed in May 2024.
The Paternity Leave (Bereavement) Bill will allow bereaved parents to take paternity or parental leave even if they do not meet the usual requirement of working the same job for a minimum of 26 weeks.
It will guarantee leave for working fathers, non-birthing partners, in the event where a mother, or a person with whom a child is placed or expected to be placed for adoption, dies. It is expected to be implemented at some point in 2025.