Spring Statement 2025: Tax update

Following today’s Spring Statement 2025, in this blog we review the tax announcements.

The Chancellor, Rachel Reeves, confirmed there would be no tax increases in addition to measures previously announced at the autumn 2024 Budget.

In that regard, the Finance Act 2025 received royal assent on Friday 20 March and this covered some of the previously announced changes.

However, it does not include legislation on the inheritance tax reforms to agricultural and business property relief expected from April 2026 or pensions from April 2027. We continue to monitor the ongoing landscape here and will publish further updates as the position becomes clearer.

The Chancellor confirmed there is no intention to deviate from her earlier pledge to hold only one major fiscal event each year, the next now being due in autumn 2025, following a spending review in June 2025.

Additional tax revenue

Little in the way of new measures was announced. However, Rachel Reeves did reference that of the £6.26 billion of additional policy measures, £1 billion relates to additional revenue via closing the ‘tax gap’. Principally this relates to additional collections of overdue tax debt via HMRC’s debt management unit, alongside some increase to late payment penalties for VAT and income tax self assessment in respect of the forthcoming expansion of making tax digital.

Making tax digital

As regards Making tax digital (MTD), this is now being expanded and will capture sole traders and landlords with qualifying income as follows:

• April 2026 – £50,000
• April 2027 – £30,000
• April 2028 – £20,000

This will result in a marked increase in the number of taxpayers impacted by MTD. It is expected that 900,000 will be within MTD from April 2028.

Tackling tax evasion and measures on avoidance

The Chancellor announced a further crackdown on tax evasion. This includes proposals to:

• Prosecute more tax fraudsters – additional criminal investigations to increase the number of tax fraudsters charged each year by 20%
• Reforming rewards for informants – a new scheme to be launched later this year based on US and Canadian models
• Tackle “phoenixism” – a joint plan from HMRC, Companies House and the Insolvency Service to tackle contrived insolvencies that evade tax and write off debts owed to others

In addition to the above, the government published consultation documents regarding HMRC’s ability to take action on:

• Promoters of marketed avoidance schemes
• Agents who facilitate non-compliance from their clients
• Better use of third party data to increase automation and reduce errors
• Simplifying and strengthening penalties for inaccuracies by taxpayers

Additional resource will also be provided to HMRC to tackle non-compliance by offshore wealthy individuals. This includes recruiting private sector experts in wealth management and using AI analytics to identify and challenge non-compliance.

R&D tax clearance process

Following the corporate tax roadmap published at the autumn 2024 Budget, there is a desire to provide more certainty for business taxes, with a view to increasing investment and growth.

A consultation was opened today regarding a proposal to introduce an advanced clearance process for research & development tax relief claims, with a view to reducing errors fraud and increasing certainty for taxpayers.

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