On 26 March 2025, Chancellor Rachel Reeves delivered the Spring Statement with no new tax announcements, but key documents released alongside it provided updates on VAT penalties, Making Tax Digital, and potential alignment of tax deadlines.
While headline rates remain unchanged, the documents signal the government’s direction—tightening compliance, managing spending, and aiming for a budget surplus by 2029/30. Key themes also included increased defence funding and major housing reforms aimed at long-term economic growth.
Key Themes
- No New Tax Announcements - True to her word, the Chancellor introduced no new tax or duty changes. All eyes remain on the Autumn Budget.
- Housing and planning reforms - A significant portion of the government's growth revolves around boosting house building to levels not seen in over 40 years.
- Defence spending and national security - The government pledged an additional £2.2bn for the Ministry of Defence in the 2025/26 financial year. The priority here is ensuring military readiness, the acceleration of new technologies and supporting global alliances.
- Maintenance of fiscal rules: The government insists it remains on track to balance the budget by 2029/30 (in line with its “stability rule”).
- Revised 2025 growth projections: The OBR has lowered its 2025 growth forecast from 2% to 1%, but improved outlooks for the years up to 2029 suggest cautious optimism for the medium term.
- Public sector efficiencies: The Chancellor aims to control public spending by cutting costs, streamlining processes, and canceling thousands of government credit cards, while maintaining investment in strategic sectors.
Some Of The Biggest Announcements Upcoming Tax Changes: Businesses
- Employer National Insurance Contributions; Will increase the employer NICs from 13.8% to 15% from April 2025. The Secondary Threshold will drop from £9,100 to £5,000.
- Employment Allowance Increase; The rise in the Employment Allowance from £5,000 to £10,500, along with its extension to larger businesses, should help balance out the other changes to the NIC system.
- VAT Threshold increase; from April 2025 the VAT registration threshold has increased from £85,000 to £90,000.
- Furnished Holidays Lets will be treated the same as long-term lets; From 1 April for companies and 6 April for individuals furnished holidays lets will no longer be eligible for beneficial capital allowances treatment.
- Stamp Duty Land Tax; As announced in the Autumn Budget 2024, from 1 April 2025, companies buying residential property valued at £250,000 or more may face higher Stamp Duty Land Tax due to the lower rate band being split into two new bands; £0 - £125,000 abd £125,000- £250,000.
- Capital Gains Tax Relief; Business Asset Disposal Relief (BADR) remains in place with the £1 million lifetime limit. However, starting in April 2025, the rate on qualifying disposals will rise to 14%, with a further increase to 18% in 2026, marking a setback for entrepreneurs.
- R&D Tax Relief little change but consultations launched; There were no major changes to R&D tax relief in the Spring Statement, but the government has started a consultation on advance clearances for R&D tax claims, which may lead to further reforms in the coming years.
Individuals
- National living wage will rise by 6.7%; from April 2025 the national living wage will rise by 6.7% from £11.44 to £12.21 an hour for workers aged 21 and over.
- State Pension Increase; the state pension is increasing from April 2025 to £230.25 a week.
- Making Tax Digital (MTD) for Income Tax Self Assessment expands in April 2026; From April 2026 sole traders and landlords with income above £50,000 will be required to comply with MTD requirements.The income will go down from April 2027 for £30,000 and above and then in April 2028 with income of £20,000 and above.
- Penalties for late payments of income tax under self assessment will be increased; with those failing to pay within a month facing a 10% penalty, more than double the current rate from 1 April. This regime will also be applied to VAT late payment penalties
- Reduction in Universal Credit Debt deductions; For individuals on Universal Credit, the Autumn Budget brought welcome news with a reduced cap on monthly debt deductions, lowering it from 25% to 15% of payments starting in April 2025.
- Unused Pension Funds; Inheritance tax: pensions
Starting from 6 April 2027, it is proposed that most unused pension funds and death benefits will be counted as part of an individual’s estate when calculating inheritance tax. - Double cab pickups; from April 2025 double cab pick-up trucks will be treated as cars for the purposes of capital allowances, benefits in kind (BIK), and some deductions from business profits.
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