Yesterday, The Chancellor, Rachel Reeves delivered the government's 2025 Spring Statement, presenting a number of developments that UK businesses should carefully consider.
Below, we highlight the key points from the Statement and provide insights tailored to sole traders and limited companies.
The chancellor has introduced significant welfare reforms, aimed at reducing dependency and encouraging individuals back into the workforce. With £1 billion allocated to personalised employment support, this could be an opportunity for businesses seeking to recruit.
Access to a broader talent pool could help address recruitment challenges, particularly in business sectors facing staff shortages.
The Chancellor reiterated the government's focus on tackling tax evasion, which is expected to generate an additional £1 billion for the economy. An extra 500 HMRC compliance staff (on top of the 5,000 announced in the 2024 Autumn Budget) and 600 HMRC debt management staff will be appointed, with an additional £87 million investment in debt collection, as tax debt has more than doubled in the last five years.
Tax evasion is the illegal practice of deliberately avoiding paying taxes that are lawfully owed. This can involve activities such as underreporting income, inflating deductions or expenses, hiding money or assets in offshore accounts, or failing to file tax returns altogether. Essentially, it’s a deliberate effort to deceive tax authorities, like HMRC here in the UK, to reduce or eliminate tax liability.
A new reward scheme modelled on US and Canadian tax authorities will be introduced in 2025, with compensation linked to the percentage of tax collected as a result of their tip off. We advise our clients to review their accounting practices and seek professional advice to mitigate any potential risks in this area.
As previously announced, the government will increase its defence spending, including an additional £2.2 billion for the Ministry of Defence. These funds may translate into new contract opportunities, particularly as the government aims to position the UK as a leader in defence-related industries.
The Office for Budget Responsibility (OBR) has revised its growth forecasts. While growth for 2025 has been downgraded to 1%, the outlook for subsequent years has improved, with a projected 1.9% growth in 2026. Inflation is expected to average 3.2% this year, declining to 2.1% by 2026. For businesses, these figures highlight the importance of strategic planning to manage short-term cost pressures while preparing for a more stable economic environment in the medium term.
The Statement includes a £13 billion commitment to capital infrastructure projects over the next five years, along with £2 billion for social and affordable housing. This represents potential opportunities for businesses involved in construction, real estate, and associated trades.
From 6th April 2024, the penalties for late payment of VAT will increase if over 14 days:
An additional 10% will apply per annum on top of the above, and the rates will apply to MTD for income tax from April 2026.
New confirmation that all Self-employed individuals and landlords with qualifying income over £20,000 will be required to use MTD. The timings won’t change for self-employed individuals and landlords with income over £50,000 (who will be included from April 2026) and no dates for partnerships or Corporation Tax, have been provided yet.
From Summer 2025, it is expected that employees will be able to report Child benefit directly to HMRC and pay the HICBC through their PAYE deductions, rather than having to submit a Self Assessment Tax Return.
On a positive note, no new tax increases were announced. This provides a degree of certainty for businesses, allowing them to plan their finances without the immediate concern of additional tax burdens. There were no reversals to the plans for Employers NI, meaning the increase to 15% and reduction of the £9,100 limit to £5,000, will go ahead as planned.
At Clever Accounts, we recommend businesses take the following steps in response to the Spring Statement:
Our team is here to provide bespoke accountancy advice tailored to your needs. If you would like to discuss any accounting-related aspect of your business finances, please do not hesitate to get in touch.
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