Spring Statement 2025 Roundup

Here we go again!

Chancellor Rt Hon Rachel Reeves spoke for just 40 minutes today as she announced her government's plans in today's Spring Statement (26th March 2025). You may have seen that sometimes they are called budgets and other times they are called statements; the difference is that a statement usually contains fewer changes than a full budget, so you'll sometimes hear a statement called a mini-budget.

Here Are My Key Takeaways:

Unlike many previous statements and budgets, this Spring Statement felt more like a pre-warning of what is to come rather than changes immediately impacting businesses and households. The speaker of the house also did not have to interrupt once to tell the MPs to be quiet (which usually happens multiple times!) and I also noted that her digs at the Conservative party were frequent and repetitive. Maybe trying to shed blame before big changes in the Autumn? Only time will tell!

The government planned to reduce inflation by more than 50% after it had increased to the high of 10.7% and the latest figures show they have achieved this, with inflation being 3.4% in February 2025.

The OBR's (Office for Budget Responsibility) latest figures for growth however are a big warning sign. Last Autumn, the OBR predicted that the UK economy would grow by 2% but just 6 months later, the OBR have halved their prediction to just 1%.

This could be due a number of factors including:

• Both people and businesses spending less money

• Inflation, although reduced to 3.4% is higher than expected, pushing up costs

If you are a business owner who is seeing fewer customers, less sales or lower income than usual for this time of year, I hope it is a little comforting to know that it is the UK Economy as a whole and not just you and your business.

Tax Increases

No Tax Increases or major changes to businesses except those announced last Autumn that come into effect from next month (National Minimum Wage and National Insurances increases for example).

Universal Credit/PIP Changes

The Chancellor did announce that Universal Credit will increase from £92 per week this year to £106 per week by the 2029/2030 tax year. The biggest cut to benefits was the announcement that all new claimants for the health element of Universal Credit will see a 50% cut and that it will remain frozen, meaning it won't increase each year with inflation like other benefits.

Defence Spending

Another key area of the Spring Statement was the increase in defence spending. The Chancellor committed to 2.5% of GDP to be spent on defence by 2027 with a £2.2 billion increase this year, £400 million of which is earmarked for technology. Schemes were mentioned such as a Voluntary Exit Scheme for Civil Service worked and the introduction of more AI to boost efficiency across Government.

Interestingly, the Chancellor also mentioned that they will make it easier for small businesses to access MOD (Ministry of Defence) contracts. If you are a tech start-up or in the technology field, this could be great news for your business. What wasn't included on the TV

With every budget and statement, the Chancellor's speech only contains part of a much larger document which I digest after each event for those hidden changes that may be relevant to you. The biggest one being Making Tax Digital.

You've heard me talk about Making Tax Digital for Income Tax for a while now and despite the many years of delays, it is happening and will affect many more people after confirmation in today's spring statement. From April 2026, sole traders and people with property income of £50,000 or more in a year will need to complete quarterly submissions and an end of year statement rather than the once a year self-assessment we know now. From April 2027, this extends to those with an income of £30,000 or more and following today's announcement, those with an income of £20,000 or more in sole trader or property income per year will be required to submit quarterly from April 2028.If you are not bookkeeping regularly, delay in getting your receipts to your bookkeeper or accountant or currently have a once a year accountant, you need to start looking for support. Whether that's a new routine to make regular bookkeeping a habit, setting reminders to get documents to your bookkeeper or accountant or switching to someone forward-thinking like A B C S UK, the time you spend now will save you so much time, stress and money in the future.

What's Next

Whilst the Chancellor announced the envelope (the amount the government will give public sectors) the amount each sector will get will not be made available until the Spending Review in June.

Rt Hon Rachel Reeves also confirmed there will be a budget in September and this is where we are likely to see major changes.

Do you have any questions?

Send me an email ask@abcsuk.com