Summary of the Spring Statement 2025
Summary of the Spring Statement 2025
Rachel Reeves delivered her Spring Statement on 26th March 2025. Staying true to her promise, the Chancellor made it clear that the statement would focus on providing an update on the current state of the economy. As a result, there were no surprises when it came to tax changes, with existing tax rates remaining untouched.
Upcoming Changes still to come
- National Minimum Wage increase from 1st April 2025.
- As of 6th April 2025, the rate of Employers National Insurance Contributions (NICs) will rise by 1.2%, bringing it to a total of 15%. Additionally, the secondary threshold, which marks the level at which employers start paying NIC on their employees' earnings, will decrease significantly to £5,000, down from the previous £9,100.
- The non-dom status is set to be abolished from April 2025, paving the way for a new residency scheme to be implemented.
- Tax benefits for Furnished Holiday Lets are set to expire in April 2025, meaning property owners and investors will no longer benefit from tax reliefs.
- Starting in April 2026, Business Property Relief and Agricultural Property Relief will have a cap of £1 million for eligible assets, with any amount exceeding this limit receiving only half the relief.
Summary of other key announcements
Economic Growth
- The Office for Budget Responsibility (OBR) has revised the UK’s growth forecast for 2025, lowering it from 2% to 1%.
- To tackle the fiscal deficit, the government plans a £14 billion package aimed at reducing the deficit from £4.4 billion to £9.9 billion by 2029-2030 period.
- Inflation is expected to rise before eventually falling.
Headroom Restored
- The OBR reports that Reeves has effectively restored the government's fiscal headroom, paving the way for potential tax cuts or enhanced spending in the future.
Welfare Reform
- Universal standard allowance is set to rise from £92 per week in the 2025/26 financial year to £106 per week by 2029/30.
- Universal Credit Health will see a 50% reduction and frozen for new claimants.
- By 2029/30, approximately 3.2 million families will face financial setbacks due to welfare cuts.
- Personal Independence Payments (PIPs) will be reviewed, with an additional eligibility requirement introduced for the daily living element of the benefit.
- A budget of £1 billion will be dedicated to employment support initiatives, alongside £400 million aimed at supporting jobcentres.
Defence spending
- By 2027, the government aims to raise defence expenditure to 2.5% of GDP.
- Overseas aid will be reduced by 0.3% of gross national income.
Housing and infrastructure
- The government aims to build 1.3 million homes by 2030.
Education
- An investment of more than £600 million will be allocated to train up to 60,000 new construction workers.
Who might these changes affect?
- Welfare Recipients: Those relying on Universal Credit or other welfare benefits will be affected by the planned cuts, which may reduce their financial support.
- Construction Industry: Increased investment in construction is expected to generate more job opportunities, attracting a larger workforce into the sector.
- Defence Sector: The rise in defence funding will benefit the defence industry, including contractors and personnel, through enhanced financial resources.
- Housing Sector: The goal to build more homes by 2030 will impact homebuyers, developers, and the construction industry, creating opportunities for new housing developments and potentially improving market availability
How can Aston Shaw help you?
Aston Shaw takes the worry out of managing your taxes, ensuring you know you are filing correctly and whether you need to submit specific taxes like personal tax. Our team of specialists are here to offer you the essential information and support your needs. Additionally, we are not limited to any specific sector, enabling us to assist clients in industries such as construction, defense, and housing.
Contact us
Please contact taxadvisory@astonshaw.co.uk and speak with one of our expert Tax Advisors to see how we can assist you.