UK Spring Statement 2025: Key Updates
On March 26, 2025, UK Chancellor Rachel Reeves delivered the Spring Statement to Parliament, reviewing the economy’s progress over the past six months. The Office for Budget Responsibility (OBR) has lowered the UK’s 2025 growth forecast from 2% to 1%, down from its projection in the Autumn Statement.
Key announcements from the Spring Statement include:
- No major tax changes – The statement does not introduce significant corporate or individual tax policy changes. As previously announced in the Autumn Statement, the employer’s national insurance (NI) contribution will rise from 13.8% to 15%, and the secondary threshold will drop from £9,100 to £5,000, effective April 6, 2025. No further changes were made.
- Increased defense spending – The government plans to raise defense spending to 2.5% of GDP by 2027 while reducing overseas aid to 0.3% of gross national income. An additional £2.2 billion will be allocated to the Ministry of Defense next year.
- Making Tax Digital (MTD) updates – From April 2028, MTD for Income Tax will apply to sole traders and landlords earning over £20,000. Certain exemptions or deferrals will be available. The policy framework for MTD and penalty reforms will be finalized, with legislation expected before April 2026.
- New tax penalties – Starting April 2025, taxpayers in the MTD scheme will face a 3% penalty on overdue taxes after 15 days, an additional 3% after 30 days, and a 10% penalty for taxes unpaid after 31 days.
- Tax debt recovery measures – HM Revenue and Customs (HMRC) will increase efforts to collect overdue taxes. It will resume “direct recovery” from individuals and businesses that can pay but avoid doing so. The government is also exploring automation for lower-value tax collections and expanding counter-fraud initiatives, including prosecuting tax fraud and rewarding informants.
- High Income Child Benefit Charge (HICBC) updates – Starting in the summer of 2025, employed individuals liable for HICBC can report their family’s Child Benefit payments through a new digital service. They will also have the option to pay the charge directly through the PAYE system without registering for Self-Assessment.
- R&D tax relief reforms – The government will consult on a revised advance clearance system for R&D tax relief, providing businesses with greater tax certainty. Additionally, businesses will be able to secure certainty on transfer pricing aspects of cost contribution agreements under the UK’s advanced pricing program.
©Shan & Co. 2025