Delivering her Spring Statement alongside revised forecasts from the Office of Budget Responsibility (OBR), Chancellor Rachel Reeves outlined the Government’s economic priorities and commitment to fiscal discipline.
As anticipated, the Spring Statement did not contain any significant tax changes, instead keeping her promise to deliver tax announcements at the Autumn Budget. However, the Chancellor mentioned a continued crackdown on tax avoidance during her speech.
Businesses seeking additional support from this Spring Statement found no comfort as the Chancellor did not attempt to roll back any previous changes made last year.
Let’s have a brief look at the measures announced.
Spring Statement 2025 key measures:
Tax
- Crack down on tax evasion through new investment in HMRC technology
- Tax thresholds and allowances remain frozen
- High-Income Child Benefit Charge (HICBC) will be paid by employed parents through PAYE from Summer 2025. This removes the need to register for Self-Assessment.
- New consultation on Research and Development tax relief advance clearances
- Improvements to the tax system through Making Tax Digital
- Consultation for third-party data suppliers on improving data quality acquired by HMRC for gathering tax
- Review of reforms to Individual Savings Accounts
- Removal of Climate Change Levy (CCL) costs to help produce low-carbon hydrogen.
Spending
- Inflation is projected to fall to 2% by 2027. OBR expects it to average at 3.2% this year
- £3.25 billion transformation fund to decrease government running costs
- £2.2bn on defence spending, creating thousands of skilled jobs and new business opportunities. Defence spending will reach 2.5% of the GDP by April 2027.
- £400m Ministry of Defence UK defence innovation fund
- Overseas aid reduces to 0.3% of GDP, saving £2.6bn by 2029/30.
- £2bn investment in social and affordable housing
- £4.8bn cut to the welfare budget,
- State pension and pension credit to rise by 4.1% in April 2025
- £600m to train up 60,000 new construction workers
A brief recap of the Autumn Budget announced measures:
- Increase in Capital Gains Tax to 18% for lower rates and 24 per cent for higher rates.
- Employers National Insurance rate rising to 15 per cent from 13.8% and a reduction of the threshold from £9,100 to £5,000
- Abolishing the UK’s non-domicile regime and introducing policies to tax non-doms on their worldwide income
- Stamp Duty Land Tax increase from 3 per cent to 5 per cent and a reduction in thresholds for first-time buyers.
- Introduction of VAT charges to private school fees
- Business Asset Disposal Relief (BADR) changes. The 10 per cent rate remains until 6 April 2025, after which it will increase to 14 per cent this year. On 6 April 2026, it’ll increase by a further 4 per cent to 18 percent.
This year’s Spring Statement had a clear message: stability first, change later.
Now is the time for business owners and individuals to assess their position and review their tax planning strategies with their accountant.
Contact us if you would like to discuss any of the upcoming measures.
To read the full Spring Statement released by the Government, please click here.
