Spring Statement 2025: Your Guide to Changes

The Spring Statement saw the Chancellor, Rachel Reeves, deliver her second fiscal statement following her 2024 Autumn Budget which saw some major changes to the tax system.

The Government had already announced that the Spring Statement would not include any tax changes, but a new policy paper on Making Tax Digital and the publishment of several consultations were announced today.

Making Tax Digital

With the introduction of Making Tax Digital (MTD) for income tax for self-employed individuals and landlords starting in April 2026, now is a good time to review our initial summary. Read more here.  

Consultations

Several consultations were released, we summarise the main consultations which are of interest. Read more here.

Late Payment Penalties

From 1 April 2025 late payment penalties for VAT and Income Tax will increase to encourage tax to be paid on time. The new penalty rate will be:

• 3% of the tax outstanding where tax is overdue by 15 days
• Plus a further 3% where tax is overdue by 30 days
• Plus 10% per annum where tax is overdue by 31 days or more

Despite there not being any new tax changes announced today, there are some major tax changes on the horizon, a summary of which can be found below:

Employment Taxes

There were no new changes beyond those announced in the Autumn Budget, which highlighted key updates to wages, National Insurance, Income Tax, payrolling of benefits and electric vehicles. Read more here.

Frozen Bands and an Increase in Capital Gains Tax

With frozen Income Tax allowances and marginal rate bands, more individuals will see an increase in their income tax exposure in the forthcoming years.

Read further information from our Autumn Budget summary here.

Capital Gains Tax rates have increased from 30 October 2024 to 18% and 24%

Business Asset Disposal Relief (BADR) allows for £1m of gain to be taxed at 10% – this is due to increase to 14% after 5th April, with a further increase to 18% from 6 April 2026. Those contemplating a sale of their business, will see an increase in their tax liabilities over the coming years.

Inheritance Tax is likely to increase for business owners, farmers and those with pension savings. The restriction in Business Property and Agricultural Property Relief is likely to have a major impact on many, with proposals of just a £1m lifetime limit which is due to take effect from April 2026. In addition, certain pensions will fall into the Inheritance Tax regime from April 2027. Planning in advance is key to understand exposure to Inheritance Tax and consider options available to reduce exposure and protect wealth.

Read more on this from our Autumn Budget update here.

For non-UK domiciled individuals the remittance basis of taxation is being abolished from 6 April 2025. This means all long-term UK residents will be taxed on their world-wide income and gains on an arising basis, rather than (for some) when income and gains are brought into the UK. A Temporary Repatriation Facility and a Foreign Income and Gains regime will be introduced providing a time limited opportunity to gain access to favourable tax rates. This is a complex area of taxation and advice should be obtained from one of our specialists.