Key Points from the Spring Statement

Rachel Reeves delivered her Spring Statement on Wednesday 26th March. The announcement was was more focused on spending, however there are some key points to highlight regarding their tax policy.

Please read on to see how these may affect you and your business.

The government are keen to ‘close the tax gap’. Much of their plan was previously highlighted in the Autumn Budget, however they have reinforced again, that a main aim of theirs is to target those with historic unpaid tax bills.

To try and reduce the level of tax arrears owed to HMRC, more will be invested into ways of collecting aged debts with a view to aiming towards an automated tax liability recovery system to help close the gap.

RE-CAP

Key Changes Previously Announced:

• Tax thresholds frozen until 2028.

• Inheritance tax threshold frozen until 2030.

• Stamp Duty Land Tax cuts end on 31 March 2025. 

• National Living Wage rises in April 2025 to £12.21 per hour.

• Employers' NIC increases by 1.2% to 15% from April 2025 .  

• Business Asset Disposal Relief rates increases to 14% from April 2025.

• From 6 April 2025, most double-cab pickups treated as cars for tax purposes.

• Non-dom status will be abolished from April 2025 with a new residence scheme introduced.

• VAT on school fees since January 2025.

• Furnished Holiday Lettings tax regime abolished from April 2025.

SPRING STATEMENT KEY POINTS

Penalties

In order to encourage payment of tax on time, there will be an increase in late payment penalties for VAT and also for MTD for Income Tax, as it is introduced.

The new rates will be 3% of 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.

Making Tax Digital

As we have been previously made aware, the government plans to go further with their modernisation and creation of a digital tax system. Their biggest step towards this will be through the introduction of Making Tax Digital from April 2026 for sole traders and landlords with turnover over £50,000.

They have confirmed that those with turnover over £30,000 will come in from April 2027, and in the Spring Statement it was announced that those with turnover over £20,000 will be mandated into Making Tax Digital for Income Tax from April 2028.

High Income Child Benefit Charge (HICBC)

Employed individuals who are liable to the HICBC, will be able to report this through a new digital service enabling them to opt to pay this through PAYE, without needing to register for Self Assessment. It is anticipated this will be available from summer 2025.

New PAYE portal

It has been announced that from April 2025 HMRC will be launching a new PAYE portal where taxpayers can check the data HMRC holds for them, notify HMRC of any changes and find explanations about tax codes.

Self Employment reporting threshold

It has been announced that the Income Tax Self Assessment reporting threshold will be increased during the current parliament, although no exact dates have been announced.

The income threshold currently sits at £1,000, after which income is required to be reported via tax return. The threshold is set to be increased to £3,000 before a tax return is necessary. However, you will still need to inform HMRC about trading income between £1,000 and £3,000 through a new online service they will be introducing.