Below we provide a summary of the Spring Statement 2025 and the main changes that come into effect from April 2025 and beyond. The changes were announced well ahead of the Spring Statement.
The Office for Budget Responsibility (OBR) suggested that the Chancellor would have missed her spending rule – for taxes to cover day to day expenditure in 2030 – by £4.1bn had changes not been made during the Spring Statement.
Against a backdrop of increased defence spending, a reduction in economic growth, the risk of US tariffs and rising borrowing costs, Rachel Reeves’ cost cutting in the civil service, welfare and international aid alongside economic growth generated from housebuilding, should restore the £4.1bn deficit to a £9.9 bn surplus. This would return the Chancellor to the position predicted at the Autumn Budget.
Although the OBR forecasts that the required level of economic growth is achievable, an uncertain global economy and unstable trading patterns, mean that further tax and spending changes may be needed in the Autumn Budget.
There was very little mention of tax in the Spring Statement, except to increase efforts to collect all the tax due.
Our document summarises the main changes that come into effect from April 2025 and beyond, all of which were announced well ahead of the Spring Statement. The changes include:
From April 2025
- New residence-based system of taxation for foreign income and gains with abolition of remittance basis for foreign domiciled individuals
- Scope of IHT depends on long-term residence rather than domicile
- Increases in company car benefits
- All new double cab pick-ups to be treated as cars, not vans
- Increases in Employers’ NICs and Employment Allowance
- Increases in CGT rates for gains on Business Asset Disposal Relief and Investors’ Relief assets, and on ‘carried interest’ receipts
- Extension of Agricultural Property Relief to land managed under an environmental management agreement
- Significant changes to business rates reliefs
- Changes to Audio-Visual Expenditure Credit (AVEC)
- Late payment penalties for VAT increased
- Furnished Holiday Lettings regime ends
- Stamp Duty Land Tax thresholds lowered
- Rate of interest on overdue tax and VAT increases by 1.5 percentage points
Later changes
- ‘Payrolling’ of taxable benefits becomes compulsory – April 2026
- 100% Agricultural Property Relief and Business Property Relief expected to be restricted to first £1 million of an estate, with 50% relief above that – April 2026
- Unused pension pots become liable for Inheritance Tax on death – April 2027
- Making Tax Digital for Income Tax Self-Assessment becomes compulsory for those with qualifying income above £50,000 – April 2026
- MTD for ITSA extended to those with income above £30,000 – April 2027 – and £20,000 – April 2028
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