Spring Statement details – a guide
Welcome to our update on the Chancellor’s Spring Statement, details of the key announcements can be found in this guide below.
After the 2024 Autumn Budget, which saw a comprehensive range of tax rises, further tax rises were not anticipated in the Spring Statement, although many nervously expected some.
The good news is that there were no new tax rises announced in the Spring Statement. It focused on investment in defence and a reduction in welfare spending. This also means that the widely reported changes to ISAs haven’t materialised (for now).
The bad news is the tax rises in the Autumn Budget remain and, with this, an urgency to plan for these. This is especially so with Business Property Relief being significantly reduced from April next year. (Alongside Agricultural Property Relief).
Consideration should also be given to the changes in Business Asset Disposal Relief and Investors’ Relief. Inheritance tax will be also be levied on unused pension benefits from April 2027, which requires action with regards to estate planning.
The Chancellor explained that the OBR has now downgraded its 2025 forecast for UK growth. Reducing it from 2% (in October 2024) to 1% as of March 2025. However, the OBR’s long-term forecast was more positive, where growth would increase for each year for the remainder of the current parliament.
An update on inflation was also provided. OBR’s forecast is now that inflation will be 3.2% in 2025 and reduce to 2.1% in 2026, before meeting the Bank of England’s target rate of 2% in 2027.
What do this Spring Statement details mean for you?
If you would like Alexander & Co to review your current situation or discuss how the announcements in the Spring Statement could affect your future plans, please contact us to discuss how we can assist you. Below, we have summarised some of the key issues.
Making Tax Digital for Income Tax update
It was confirmed that MTD for Income Tax will be extended to sole traders and landlords with total self-employed/property income over £20,000 from April 2028.
As you may be aware, from April 2026 sole traders and landlords with qualifying income over £50,000 will be required to use this scheme. This will then extend to those with qualifying income over £30,000 in April 2027.
We have already contacted clients who will be required to use Making Tax Digital from April 2026 and would recommend you get ahead of these changes. If you have any questions regarding this please contact us in your usual way. You can also find out more about Making Tax Digital for Income Tax on our dedicated page here.
Research and Development tax relief advance clearances – the Spring Statement details a new consultation
At Spring Statement, a consultation was announced into advance clearances for Research and Development. The government is seeking views on widening the use of advance clearances for R&D tax reliefs to help reduce error and fraud, provide certainty to businesses and improve the customer experience.
We will be following the progress of this closely and will provide clients with an update when it is published. Alexander & Co has specialist, in-house R&D tax relief specialists who can support clients with claims. These are undertaken by fully qualified accountants and tax advisors. Please contact us if you have any questions regarding R&D tax relief.
Individual Savings Accounts (ISAs) – annual allowances
Prior to the spring statement, it was widely reported that the government was reportedly considering reducing the amount you can tax-efficiently place in a Cash ISA each tax year. The figure of £4,000 was speculated, the reason for this cut was cited as a bid to encourage greater investment.
The good news is the ISA subscription limit will remain at the current level (£20,000) in the 2025/26 tax year. The ISA annual limit is frozen until 2030, with the Junior ISA (JISA) annual limit remaining at £9,000 in 2025/26.
However, the government did state that it will continue reviewing ISA reform options, this includes stocks and shares ISAs. It is likely that there will be some changes to ISAs in the future. We are keeping a close eye on this.
Pensions
In 2024, the government announced a new Pension Schemes Bill, which will legislate several areas of pension policy. Further reforms were not announced in the Spring Statement.
Therefore, the Annual Allowance will remain at £60,000 in the 2025/26 tax year. This may be lower if your income exceeds certain thresholds, or if you have already flexibly accessed your pension.
There was also speculation regarding a reduction in the tax-free amount you can withdraw from your pension. This has not changed. Therefore, as it stands, you can still withdraw up to 25% of your pension (up to a maximum of £268,275) tax free when you reach the normal minimum pension age of 55. (This is planned to increase in 2028 to 57).
It is important to remember that Inheritance Tax (IHT) will be levied on unused pension benefits from April 2027. This should be considered as part of any estate planning.
Spring Statement details means the Autumn 2024 budget tax increases remain – take action
To recap, the wide-ranging tax increases announced at the Autumn 2024 budget remain.
Key for business owners is Business Property Relief being significantly reduced from April next year, (alongside Agricultural Property Relief).
As mentioned earlier, please contact us to discuss how we can assist in planning for this. We will be able to consider any tax mitigation strategies to assist you.
The key tax increases which may affect you include:
- Inheritance Tax (IHT) is planned to be levied on unused pension benefits (from April 2027).
- Business Property Relief and Agricultural Property Relief being significantly limited from April 2026. There is a window of opportunity to plan now.
- CGT rates for non-property gains were raised in line with property rates to 24% for higher tax payers
- Reductions in Business Asset Disposal Relief (BADR) and Investors’ Relief.
- Employer National Insurance contributions (NICs) rising from April 2025, (from 13.8% to 15%). Additionally, the threshold at which employers start paying NICs will be reduced. However, Employment Allowance is at the same time increasing to £10,500 (from £5,000).
- Income Tax thresholds remaining frozen until 2028.
- The IHT nil-rate bands remaining fixed until 2030.
- The non-dom tax regime being abolished from April 2025.
- Stamp Duty Land Tax surcharges on second home purchases rose from 3% to 5% from 31 October 2024.
Please contact us if you would like to discuss how we can assist you with any of these changes.
Alexander & Co – expert tax advice
Alexander & Co has a comprehensive tax team advising both businesses and individuals on a wide range of issues. We provide specialist advice in many business sectors.
If you require any advice relating to the issues in the Spring Statement, or wider tax advice, please contact us. You can email us at info@alexander.co.uk, telephone one of our offices or use the contact forms on this website.
