Spring Statement 2025 Round-up

Published: March 27, 2025

Wednesday 26^th March 2025 saw Chancellor Rachel Reeves step out with the red box once again to deliver an update on economic developments. With the Labour government deciding to hold one formal Budget per year each autumn, we expected yesterday’s statement to deliver more details on decisions already taken, rather than acting as a full-blown fiscal update.

We’ve summarised some of the key points from the statement that you should be aware of below.

Key Points

Growth forecast: The OBR has cut growth forecasts for 2025 from 2% to 1%.

Capital spending increase: An increase of £2billion a year relative to the plans set out in the autumn is expected.

Inflation: Forecast to be 3.2% in 2025 (up from 2.6% forecast in October) and falling to 2.1% in 2026, returning to the Bank of England’s 2% target from 2027.

Making Tax Digital (MTD)

The government will expand the rollout of MTD for income tax self-assessment to sole traders and landlords with incomes over £20,000 from April 2028. The government will also make further detailed changes to MTD as set out in the technical note ‘Modernising the tax system through Making Tax Digital’.

Construction industry

The chancellor appeared proud to confirm that the OBR (Office for Budget Responsibility) had confirmed that the government’s house building reforms will ‘lead to a forty-year high’ and once again committed to building 1.5 million homes by the end of the current parliamentary period. It was announced that the government will provide up to £600million to train up to 60,000 more construction workers.

Spring statement 2025, making tax digital

Increasing late payment penalties

The government will increase late payment penalties for VAT taxpayers and income tax self-assessment taxpayers as they join MTD, from April 2025 onwards. The new rates will be 3% of the tax outstanding where tax is overdue by 15 days, plus 3% where tax is overdue by 30 days, plus 10% per annum where tax is overdue by 31 days or more.

Pledge to close tax gap

The government reasserted its pledge to close the tax gap and ensure that businesses and individuals pay the right tax. To support this, they have announced measures to raise over £1billion in gross tax revenue and published further consultations including enhancing HMRC’s use of third-party data for automation and strengthening HMRC’s ability to act against tax advisers who facilitate client non-compliance.

Conclusion

We wanted to take this opportunity to reassure you that we’re here to provide support and guide you through any questions you might have on changing legislation. If you need further clarification on how exactly these latest announcements will affect you going forward, don’t hesitate to get in touch with our team.