What To Expect From The Chancellor’s Spring Statement

The “Spring forecast” will be presented to Parliament on 26 March 2025, alongside a statement from the Chancellor, Rachel Reeves. What do we anticipate being announced?

ONE FISCAL EVENT PER YEAR – BUT WILL THAT HOLD?

The Chancellor and the Treasury have emphasized that there will be only one full fiscal event per year to provide stability for families and businesses. Given that the October 2024 Budget already introduced £40 billion in tax rises and £70 billion in spending policies, the assumption has been that no further tax increases would be announced.

However, economic challenges may force a reassessment. According to Bloomberg, high borrowing costs and weak economic growth have already erased the Government’s £9.9 billion fiscal headroom. This doesn’t even account for potential increases in defence spending. As a result, speculation is growing over whether the Chancellor may need to change course.

At a recent CBI conference, the Chancellor stated there would be no additional tax rises on the scale of the Autumn Budget. However, the Prime Minister later walked back that statement, leaving the door open for potential tax increases in 2025. So, what could that mean for you?

WHAT TAX CHANGES COULD BE ANNOUNCED?

While some tax measures, such as VAT on private education (which started in January 2025), are already locked in, there are a few areas where adjustments could be made:

1. Employer Relief from National Insurance Contributions (NICs)

• With the 6 April 2025 rise in employer NICs approaching, there may be relief measures such as:
• An increase in the Employment Allowance
• A higher threshold before NICs become payable

2. Support for the Charity Sector

• Given rising costs, charities may receive NIC relief to help offset funding challenges.

3. Inheritance Tax (IHT) Adjustments for Businesses and Farmers

• The planned April 2026 reduction in IHT reliefs has sparked protests from farmers.
• The Chancellor could respond by raising the £1 million limit on business and agricultural property relief – though this seems unlikely.

4. Capital Gains Tax on Business Asset Disposal Relief

• A potential review of planned CGT rate increases – but again, a reversal is doubtful.

THE MOST LIKELY TAX CHANGE? EXTENDING THE TAX THRESHOLD FREEZE

If any tax change is announced, the most plausible one is an extension of the freeze on income tax thresholds and allowances beyond 5 April 2028.

• The Chancellor reportedly considered this in the October 2024 Budget but chose not to implement it at the time.
• The Institute for Fiscal Studies (IFS) estimates that extending the freeze could generate £3.5–£4 billion per year, assuming inflation stays at 2% or higher.
• Treasury officials have described this idea as **“obvious” and “interesting”, suggesting it is under serious consideration.
• Freezing thresholds has the advantage of not technically breaking Labour’s manifesto pledge to avoid raising income tax rates.
• IFS Director Paul Johnson has noted that this move would be politically easier than direct tax hikes, as it could later be reversed if economic conditions improve.

Announcing a threshold freeze now would allow the OBR to count it as a positive for public finances, while delaying any immediate legislation. If economic conditions improve, tax increases or severe spending cuts may not be necessary.

WHAT’S NEXT?

In our upcoming webinar on 1^st April, we will review any changes from the forecast and look at ways you can mitigate their tax burden in 2025 and beyond. Click here to sign up and find out what the changes might mean for you.

If you would like to discuss anything covered in this article, please reach out to us here.

Articles on this website are offered only for general information and educational purposes. They are not offered as, and do not constitute, financial advice. You should not act or rely on any information contained in this website without first seeking advice from a professional.

Past performance is not a guide to future performance and may not be repeated. Capital is at risk; investments and the income from them can fall as well as rise and investors may not get back the amounts originally invested.

You are now departing from the regulatory site of Finura. Finura is not responsible for the accuracy of the information contained within the linked site.

Source: Techlink

Date written: 27^th February 2025

Approved by Evolution Wealth Network Ltd on 05/03/2025.