The Spring Statement was, as expected, a rather bland update. No changes to tax rates were announced, and no tax relief was offered to companies. This was the first budget update since the record £40bn tax-raising budget announced last autumn.
Despite the chancellor focusing on growth, there were some difficult OBR stats, with UK growth expected to halve from 2% to 1% and inflation predicted to be 3.2%.
As usual, I have focused on the elements of the Spring Statement that impact businesses and individuals.
Crack down on Tax Evasion
This was raised in the previous budget where they said HMRC would recruit tax inspectors to tackle small company tax evasion as they believe small companies account for 81% of all evasion. HMRC will use technology to improve investigations and expects to “increase the number of tax fraudsters charged each year by 20%”. Reeves says these changes will take the total revenue raised from reducing tax evasion to £7.5bn.
Child benefit
From Summer 2025 the High Income Child Benefit Charge (HICBC) can be paid by employed parents through PAYE, removing the need to register for Self-Assessment. As a reminder in April 2024 the threshold at which Child Benefit begins to be withdrawn was increased from £50,000 to £60,000, with Child Benefit will not be fully withdrawn until individuals earn £80,000 or more.
Recap of earlier changes
Given no changes to the tax rates were announced it is worthwhile recapping the changes that were announced last autumn that have already come into effect or will come into effect:
- Tax thresholds are frozen until 2028, this creates fiscal drag where taxpayers who would not normally pay tax, or pay lower taxes are ‘dragged’ into a higher tax bracket
- The inheritance tax threshold frozen until 2030
- Stamp Duty Land Tax cuts end on 31 March 2025
- National Living Wage rises in April 2025 to £12.21 per hour
- Employers’ NIC will increase by 1.2% to 15% from April 2025 and employment allowance will increase from £5k to £10.5k in 25/26
- Business Asset Disposal Relief rates (old entrepreneurs relief) will increase from 10% to 14% from April 2025
- VAT on school fees introduced from January 2025
- Furnished Holiday Lets abolished from April 2025
As always, if you have any questions on how these changes will impact you please get in touch.