We present a new volume-limited sample of L0–T8 dwarfs out to 25 pc defined entirely by parallaxes, using our recent measurements from UKIRT/WFCAM along with Gaia DR2 and literature parallaxes. With 369 members, our sample is the largest parallax-defined volume-limited sample of L and T dwarfs to date, yielding the most precise space densities for such objects. We find the local L0–T8 dwarf population includes young objects (200 Myr) and subdwarfs, as expected from recent studies favoring representative ages 4 Gyr for the ultracool field population. This is also the first volume-limited sample to comprehensively map the transition from L to T dwarfs (spectral types ≈L8–T4). After removing binaries, we identify a previously unrecognized, statistically significant (>4.4σ) gap ≈0.5 mag wide in colors in the L/T transition, i.e., a lack of such objects in our volume-limited sample, implying a rapid phase of atmospheric evolution. In contrast, the most successful models of the L/T transition to date—the "hybrid" models of Saumon & Marley—predict a pileup of objects at the same colors where we find a deficit, demonstrating the challenge of modeling the atmospheres of cooling brown dwarfs. Our sample illustrates the insights to come from even larger parallax-selected samples from the upcoming Legacy Survey of Space and Time by the Vera Rubin Obsevatory.