Chancellor Rachel Reeves delivered the Spring Statement on Wednesday 26th March 2025, outlining the economic priorities of the Labour Government and reaffirming a commitment to fiscal discipline and long-term investment.
The Statement included several important developments:
No Further Tax Increases: the Chancellor confirmed that there would be no further tax increases beyond those introduced in the Autumn Budget.
Economic Outlook: the Chancellor referred to the global economic uncertainty, citing the war in Ukraine as a driving factor. Forecast GDP growth for 2025 was cut from 2% to1%. Despite this, the Office for Budget Responsibility (OBR) has upgraded its GDP growth forecasts for each year from 2026 to 2029. The specific figures include GDP growth of 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.
Tax Evasion Crackdown: the Chancellor announced a further crackdown on tax evasion, aiming to increase prosecutions of tax fraud by 20% and raise an additional £7.5 billion in revenue.
Making Tax Digital for Income Tax: the phased rollout of Making Tax Digital for Income Tax was confirmed. From April 2026, the scheme will apply to sole traders and landlords earning over £50,000, expanding to those earning over £30,000 in 2027, and further to those with income above £20,000 by 2028. The scheme includes stricter penalties for late payments and some improvements to the design of the system were announced.
Previous Tax Changes: the Chancellor reminded the public of previous tax changes made in the Autumn Budget. These include increases in Capital Gains Tax rates, Employers’ National Insurance rates, and Stamp Duty Land Tax, as well as the abolition of the non-domicile regime and the introduction of VAT charges to private school fees. Changes to Business Asset Disposal Relief (BADR) were also noted.
Possible future measures: potential reforms to Individual Savings Accounts (ISAs) were hinted at in the larger document released alongside the Statement.
Other announcements: the government aims to:
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- increase housebuilding to a 40-year high.
- Increase defence spending by £2.2 billion, with investments in advanced technologies.
- Keep inflation on track to reach the 2% target by 2027.
- Make £4.8 billion of cuts to the welfare budget, including a freeze of the Universal Credit health element for new claimants.
The full Spring Statement documents can be found here.
If you would like to discuss the Spring Statement, please contact us.
