At the Autumn Statement 2024, Chancellor Rachel Reeves ruled out further tax rises and government spending increases, and declared that she would keep major announcements to one fiscal event per year, being the Autumn Statement. Since then though, she’s been put under pressure, with mounting speculation that she may need to change her stance and make more changes in the Spring Statement 2025 than she may originally have planned. The opposition were saying that the Statement needed to be an Emergency Budget, while recent messaging from Downing Street claiming ‘the world has changed’ suggested more content may have been coming than originally expected.

What might affect the Chancellor’s plans for Spring Statement 2025?

• Public perception – According to the latest reports and speculation in the media, 58% of the public believes the economy is worsening, with only 10% seeing any improvement. Looming National Insurance increases are hurting small businesses and that’s feeding into the wider economy.
• Sluggish Growth – for a government who have been talking about prioritising growth, the return on that effort has been minimal, with growth sluggish at best, and forecasts being revised downwards in recent weeks.
• Global Economic Uncertainties – Global events such as US trade tariffs and geopolitical tensions are affecting the UK economy.
• Fiscal Constraints and borrowing Costs – High borrowing costs and reduced fiscal headroom due to slower growth is going to have an effect.
• Fiscal Rules and Spending Cuts – The Chancellor needs to adhere to the set fiscal rules while facing pressure to support growth. This has created a fiscal trap of the Chancellor’s own making, according to the Institute for Fiscal Studies (IFS).

What has the rumour mill been predicting?

1. Spending Cuts Over Tax Rises – The government is expected to focus on spending cuts rather than introducing new tax increases. This includes welfare cuts and Whitehall efficiency measures, while only three areas of protected defence, the NHS and schools. There appears to be little opportunity for increases in taxes, given Labour’s election commitment not to raise VAT, Income Tax or employee NICs.
2. Extension of Tax Threshold Freezes – The freeze on income tax thresholds could be extended beyond 2028-29 to raise additional revenue without explicit tax rate increases.
3. Changes to the ISA System – With the ISA allowance unchanged since 2017/18, government officials have suggested a shake up of the system may be coming.
4. Increased Late Payment Penalties – The Chancellor is set to increase late payment penalties for VAT and Making Tax Digital for Income Tax Self Assessment (ITSA) from April 2025.
5. Support for Businesses – Small adjustments may be made to the Employment Allowance or targeted support offered for specific sectors like agriculture and charities.
6. Infrastructure and Growth Initiatives – The government may again highlight infrastructure improvements and development initiatives like the Oxford-Cambridge corridor to boost economic growth.
7. Fiscal Discipline and Compliance – It’s thought the Chancellor will emphasise fiscal discipline and may employ more private debt collectors to improve tax compliance and reduce the tax gap.

Today though, we have the answers!

The biggest announcements in the Spring Statement 2025 were:

• An ongoing commitment to generate economic growth, despite short-term forecast growth levels being revised downwards from 2% to 1%.
• Confirmation of increased defence spending in a rapidly changing world.
• Changes to the welfare system, including stricter tests for personal independence payments.
• Streamlining the civil service, with an accelerated new Transformation Fund.
• Increased investment in social and affordable housing.
• Tackling skills shortages, including in the construction sector.
• A crackdown on tax evasion, alongside increased penalties and interest charges from HMRC.

The Summary…

To access our summary, which gives more details on all of the above and more besides, click on the link below:

There was less content in yesterday’s speech than we thought there may be, but there will also still be more detail to come. We’ll work through the inevitable small print, and will post updates with this extra information as appropriate.

As always, if you have any specific questions from any of the announcements so far or the impact they may have on your personal or business affairs, please get in touch.