2025 Spring Statement - R J Francis & Co
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2025 Spring Statement

26 Mar 2025 Spring Statement

Posted at 15:38h in Budget by

The Chancellor of the Exchequer, Rachel Reeves MP, delivered her Spring Statement on 26 March 2025.

The Chancellor had previously committed to just one major fiscal event each year, and with the country still reeling from the measures announced in October last year it will have been a relief to taxpayers that she stuck to her promise with no tax rate or relief changes being announced.

Economic Outlook

Despite the Bank of England and the Office for Budget Responsibility (OBR) both halving their UK growth predictions for 2025 to 1%, the growth forecast in 2026 and every year thereafter has been upgraded and cumulative growth over the forecast period is now expected to be 9.4% compared to 9.2% in the October forecast.

The OBR forecasts that inflation will peak at 3.8% in July 2025, before falling close to the 2.0% target from Q2 of 2026 until the end of the forecast period.

Closing The Tax Gap

At the end of 2024 unpaid tax liabilities owed to HMRC totalled over £44 billion, more than double the level five years ago. Almost half of this is more than twelve months old.

To reduce this debt they are moving more towards automated debt recovery and are additionally investing in recruiting 500 HMRC compliance staff, in addition to the 5,000 new compliance staff whose recruitment was announced last October.

We would also hope that their repayment procedures are improved so that taxpayers who are due refunds are not kept waiting for months in some cases without justification.

Making Tax Digital (MTD)

The government has confirmed the continued rollout of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA). In addition to sole traders and landlords with qualifying income over £50,000 in 2026, followed by those with qualifying income over £30,000 in 2027, those with qualifying income over £20,000 will now also be required to make quarterly submissions to HMRC from 2028.

There will also be an increase in late payment penalties for VAT taxpayers and ITSA taxpayers as they join MTD from April 2025 onwards, to encourage taxpayers to pay on time.

Recap of changes previously announced

  • National Living Wages increases in April 2025 to £12.21 per hour
  • Employer’s NIC increases to 15% from April 2025
  • Employment Allowance increases from £5,000 per year to £10,500 per year from April 2025
  • Business Asset Disposal Relief to increase to 14% from April 2025, and again in April 2026 to 18%
  • Tax thresholds will remain frozen until 2028
  • Inheritance Tax threshold frozen until 2030
  • Agricultural and Business Property Reliefs capped to £1 million from April 2026 with a 50% relief applying thereafter.
  • Furnished Holiday Lets regime will be abolished from April 2025

We continue to wait on the detail of the proposed changes to APR and BPR rules as do many of our clients!

We’re here to help you

If you would like to discuss the impact of any of the other measures on you or your business, please contact us and we will be happy to discuss this with you.

The information outlined is intended for guidance only. It is based upon our understanding of current legislation and announcements and is correct at the time of publication. No liability is accepted by R J Francis & Co for actions taken in reliance upon the information given and it is recommended that appropriate professional advice should be taken specific to your circumstances.

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