Spring Statement March 2025
Published / Last Updated on 26/03/2025
Chancellor Rachel Reeves took the floor at 12.30pm today to deliver her Spring Statement 2025 (sometimes known as a mini-Budget). It was not a mini-Budget at all, more of a loud ‘chat’, reinforcing her message of 2 fiscal rules for Stability (Economic) and Investment for Future Growth. There were no increases in taxation and no uplifts to allowances. Mrs Reeves stating that “a responsible government must be active”. The finance industry breathed a sigh of relief.
The Office for Budget Responsibility reporting that the Autumn Budget changes will half the original forecast for UK GDP growth from 2% pa to just 1% pa in 2025 but then from 2026 onwards, GDP growth will be higher but still way below the UK’s ‘happy, floating ship’ of 2.5% pa GDP growth.
That said, here are the main points that affect your finances and taxes:
Universal Credit
- New applications for Universal Health Credit will have the benefit reduced/cut by nearly 50% to just £50 per week (currently £97 per week) from tax year 2026/27 i.e. next April.
- Existing Universal Health Credit claimants will continue to receive £97 per week but it will be frozen until 2029 where it may drop to £50 per week (unless changed by then).
- Standard Universal Credit will be increase by inflation from 2026/27 but will then be boosted by an increase of CPI + 5% in 2029.
Tax Evasion Crackdown
The Chancellor announced additional funding and teams to develop AI and other tools to crackdown on people hiding assets offshore that they should be paying taxes on as well as a bonus/incentive plan for ‘whistle-blowers’ who do so on those that are tax evaders.
HMRC Late Payment Penalty Increases
Late payment of Value Added Tax (VAT) and Income Tax via Self Assessment (ITSA) will be increased as follows:
- 3% penalty for tax outstanding up to 15 days late.
- Additional 3% penalty for tax outstanding up to 15 days late.
- Additional 10% pa penalty for tax outstanding at 31 days +.
Making Tax Digital to Catch More Self Employed and Landlords
Originally from 2023 and then from 2025 but now deferred until tax year 2026/27, making tax digital (MTD) comes into force for the Self Employed and Landlords. This means you must electronically via an approved software package, quarterly trade/tax returns and an end of year full tax return.
- 2026/27 for self employed and landlords with turnover revenue (income not profit) of £50,000 or more.
- 2027/28 for self employed and landlords with turnover revenue (income not profit) of £30,000 or more.
- NEW announced today - 2028/29 for self employed and landlords with turnover revenue (income does not profit) of £20,000 or more.
Property and Construction
Mrs Reeves announced a number of incentives for the property construction industry and training programmes to get Britain building again with forecasts that housebuilding numbers will hit their biggest rate in the construction the numbers of new homes in 40 years.
Cash ISA Review
The government finally confirmed they are exploring options to discourage ‘Cash ISA Hoarding’. There was no definitive date, but we suggest you should expect less incentives for Cash ISAs in the Autumn Budget 2025. Possibly a reduction in the amounts that can be investment each year in cash ISAs or even a lifetime ISA limit. It is no secret that Cash ISAs do nothing to grow the economy as they do not invest in stocks/shares and business.
Mr Reeves suggested the government is also working with the Financial Conduct Authority (FCA) to find ways to make it easier for savers to invest in markets as well as making them feel more comfortable in doing so with simplification and education.
Read the full Autumn Statement https://www.gov.uk/government/collections/spring-statement-2025
