Chancellor Rachel Reeves recently delivered her Spring Statement, outlining the government’s economic plans, including spending decisions, tax policies, and strategies to drive growth while managing public finances. Here’s what businesses need to know.
Public Finances and Economic Outlook
The Spring Statement was based on updated forecasts from the Office for Budget Responsibility (OBR), which presented a more challenging economic outlook than last autumn’s predictions. Key takeaways include:
- Lower GDP Growth – The OBR downgraded its 2025 growth forecast to 1%, down from a previous estimate of 2%.
- Inflation Adjustments – Inflation is now expected to average 3.2% in 2025, higher than the previous forecast of 2.6%. However, it is projected to fall to 2.1% in 2026 and 2% by 2027.
- Public Finance Challenges – Without government intervention, public finances would have fallen short of the targets set in the Autumn Budget.
Government Response: Stability and Growth Prioritised
The Chancellor reaffirmed her commitment to maintaining fiscal stability and economic growth. To stay within self-imposed spending rules, she avoided tax increases and instead focused on:
- Reducing public spending, including welfare reforms and departmental budget cuts.
- Encouraging economic growth, particularly in the housing sector, to boost employment and government revenues.
Key Announcements for Businesses
Several measures outlined in the Spring Statement could directly impact businesses:
- Making Tax Digital (MTD) Expansion
- MTD for Income Tax will now include sole traders and landlords earning over £20,000.
- Businesses should start preparing now for the transition—check out our separate article on MTD for IT for more details.
- Business Rates Reform
- The government will publish an interim report on business rates reform in summer 2025.
- Full policy details will be announced in the Autumn Budget.
- R&D Tax Relief Adjustments
- Many businesses struggle with R&D relief claims due to complex rules.
- HMRC is considering making advance clearances mandatory for certain claims to reduce fraud and errors.
- The government is also reviewing whether a minimum expenditure threshold should be introduced for R&D relief claims.
- Tackling ‘Phoenixism’ (Tax Evasion via Insolvency)
- HMRC, Companies House, and the Insolvency Service will increase enforcement against directors who dissolve companies to evade tax.
- New measures may include making directors personally liable for company taxes and requiring upfront tax payments for newly formed businesses.
No Immediate Tax Changes, but More to Come
While some had hoped for relief from the upcoming Employer National Insurance increases, the Chancellor has deferred major tax decisions until the 2025 Autumn Budget.
What’s Next for Your Business?
The Spring Statement primarily focused on long-term fiscal stability and economic growth. However, businesses should stay informed and prepare for upcoming changes in taxation, business rates, and compliance regulations.
If you’re unsure how these measures will impact your business, get in touch with us for personalised guidance.
