Spring Statement 2025 Summary

On 26th March 2025, The Chancellor Rachael Reeves delivered the Spring Statement 2025.

Speculation

In her first Budget in October 2024, Chancellor Rachel Reeves promised that there would only be one ‘fiscal event’ each year, avoiding significant tax changes more frequently.

However, as highlighted during her Spring Statement, rapid economic and political shifts, such as increased defense spending, reduced economic growth projections, and rising borrowing costs have eroded the ‘headroom’ that once allowed her to predict balancing the books by 2030.

In response, the Chancellor outlined a range of policies to restore this headroom, including cuts to civil service expenditure, welfare, and foreign aid, while increasing defense spending. Despite these changes, she refrained from raising taxes, aiming to stick to her original promise of only one fiscal event annually. Reforms to planning rules and additional investments in tax compliance were also announced, though questions remain over whether the current forecast can withstand future disruptions.

The details and what they mean for you

When the Chancellor takes a seat, the Government releases all information on the internet, including proposals she hasn’t discussed, the details of things she only briefly mentioned, and the tables of financial estimates that indicate what is significant and what is marginal. Our Statement Summary compiles the most crucial points and elucidates their impact on businesses and individuals.

Read our full Spring Statement Summary

Changes from April 2025:

• New residence-based system of taxation for foreign income and gains with abolition of remittance basis for foreign domiciled individuals.
• Scope of IHT depends on long-term residence rather than domicile.
• Increases in company car benefits.
• All new double cab pick-ups to be treated as cars, not vans.
• Increases in Employers’ NICs and Employment Allowance.
• Increases in CGT rates for gains on Business Asset Disposal Relief and Investors’ Relief assets, and on ‘carried interest’ receipts.
• Extension of Agricultural Property Relief to land managed under an environmental management agreement.
• Significant changes to business rates reliefs.
• Changes to Audio-Visual Expenditure Credit (AVEC).
• Late payment penalties for VAT increased.
• Furnished Holiday Lettings regime ends.
• Stamp Duty Land Tax thresholds lowered.
• Rate of interest on overdue tax and VAT increases by 1.5 percentage points

Later changes

• ‘Payrolling’ of taxable benefits becomes compulsory – April 2026.
• 100% Agricultural Property Relief and Business Property Relief expected to be restricted to first £1 million of an estate, with 50% relief above that – April 2026.
• Unused pension pots become liable for Inheritance Tax on death – April 2027
• Making Tax Digital for Income Tax Self-Assessment becomes compulsory for those with qualifying income above £50,000 – April 2026

This Summary covers the key tax changes announced in the Chancellor’s speech and Spring Statement. It includes tables of the main rates and allowances. At the back of the Summary you will find a calendar of the tax year with important deadline dates shown.

We recommend that you review your financial plans regularly as some aspects of the Statement will not be implemented until later dates.

How we can help

We will review the new proposals to ensure we offer our clients the best advice to help them remain as tax efficient as possible. And our colleagues at Carpenter Box Financial Advisers are always on hand to help manage investments and pensions.

If you would like more detailed one-to-one advice on any of the issues raised in the Budget, please get in touch or give us a call on 01903 234094.