Government Reaffirms Economic Strategy in Spring Statement – March 2025

March 27, 2025

The Government has reaffirmed its commitment to the economic course set out in the 2024 Autumn Budget, emphasising a drive for accelerated growth, strengthened security, welfare reforms, and enhanced efficiency measures. Central to this strategy is a renewed focus on tackling tax avoidance and evasion, alongside the introduction of stricter penalties for late payments.

Ahead of the Spring Statement, there was widespread speculation that the Chancellor might announce further tax changes. However, no such measures were introduced. Instead, the focus remained on economic growth and stability, reaffirming the Government’s long-term goals.

While no additional tax increases were announced, businesses still face significant financial pressures. From April 2025, businesses will contend with a 1.2% rise in employers’ National Insurance (NI) contributions, a lower threshold for NI payments, and an increase in the National Living Wage (NLW). These changes will inevitably add to operational costs and financial planning considerations for many organisations.

Meanwhile, changes to Inheritance Tax, announced in the Autumn Budget, will affect a greater number of individuals. However, taxpayers have been granted a one-year grace period to make any necessary adjustments, providing a crucial window for financial planning.

The Government’s strategy remains clear: fostering a stable and growth-focused economic environment while reinforcing compliance and efficiency measures. As businesses and individuals navigate these evolving fiscal policies, careful planning and strategic financial management will be essential to mitigating the impact of these forthcoming changes.
While the Spring Statement did not introduce any major new measures impacting businesses—unlike the Autumn Budget—several key developments warrant attention.

Building on measures announced in the Autumn Budget to raise £6.5 billion through stricter enforcement on tax avoidance and evasion, the Chancellor has committed to further increasing this amount by an additional £1 billion. This reinforces the critical importance of maintaining accurate and up-to-date tax records to ensure compliance.

The continued rollout of Making Tax Digital for Income Tax MTD for IT) will be expanded to include sole traders and landlords with annual incomes exceeding £20,000 from April 2028. Additionally, from April 2026, all end-of-year tax returns must be submitted via MTD-compliant software, replacing the use of HMRC’s online filing service.

Furthermore, the Government will introduce stricter late payment penalties for VAT and income tax Self Assessment taxpayers as they transition to MTD, effective from April 2025. The revised penalties will be structured as follows:

-A 3% charge on tax outstanding for more than 15 days.
-An additional 3% charge if tax remains unpaid after 30 days.
-An annualised 10% charge on amounts overdue beyond 31 days.

These measures reflect the Government’s ongoing commitment to strengthening tax compliance while encouraging businesses and individuals to adopt digital tax reporting systems. As such, taxpayers should take proactive steps to ensure they are prepared for these upcoming changes.

If you would like to discuss any of the announcements from the Spring Statement, please contact us.