Spring Statement 2025: What’s the impact for your business?

Higher borrowing costs will not only affect the government but also businesses and consumers. Along with worldwide financial uncertainty, UK businesses will find it harder to borrow and invest in employees and growth. This means national productivity is unlikely to increase from its historically low level without extra government support. 

 

We can expect extra compliance and enforcement measures from HMRC, and penalties could also increase. The government also promises to use digital tools and artificial intelligence to reduce bureaucracy. Changes to welfare assessments and payments for people with health issues could increase job applications. Spending cuts and amended procurement rules will probably reduce opportunities for businesses working in the public sector. 

 

Corporation tax. Following on from the Corporation Tax Roadmap, launched in the autumn, we can expect a consultation. Proposals include changes to advance clearances in the R&D tax relief system and a new tax process for major projects. 

 

Business rates. The Chancellor promised an interim report about the business rates system in the summer. More information should follow in the Autumn Budget. 

 

Tax collection. The government says closing the gap between taxes owed and paid is a key part of restoring economic stability. The Statement includes plans to raise an extra £1billion in unpaid tax revenue per year by 2029/30. This includes investment in HMRC’s debt management by collecting more aged debts and using automated debt recovery. There are also plans for even more tax compliance roles, in addition to the 5,000 announced in the autumn. Proposed consultation will include use of third party data to increase automation and reduce the tax gap. 

 

Making Tax Digital. Making Tax Digital (MTD) for income tax Self Assessment (ITSA) will include sole traders and landlords with income over £20,000. This will mean MTD for ITSA is likely to affect around 4million taxpayers from April 2028. 

 

Tax penalties. From next month late payment penalties will increase as expected. These apply to Value Added Tax (VAT) taxpayers and self-assessment taxpayers as they join MTD. Also expect increases to HMRC penalties for inaccurate tax returns and failures to notify them about errors. 

 

Informants. HMRC will launch a new reward scheme for informants later this year, targeting serious non compliance. 

 

Contrived insolvencies. HMRC, Companies House, and the Insolvency Service will target those using insolvency to evade tax and write off debts. 

 

The Statement included measures affecting 2.8million people currently economically inactive due to ill health. This includes reforms to incapacity and disability benefits and additional employment and health support. While this could bring employees back to the workplace, employers might face new challenges to accommodate their needs. 

 

The government says it will cut regulatory compliance costs to business by 25% by reducing duplication and inefficiency. This includes using digital technology and artificial intelligence to deliver a 25% cut in government administration costs by 2030. On this basis, it’s likely it will become even harder to talk to an adviser when you have any queries.