October last year marked the first Labour budget in over a decade – and as expected, it held a large number of changes that affected individuals and businesses in unequal measure.
As a ‘halfway point’ designed to give the Chancellor an opportunity to outline progress so far, we know from previous years that it’s also set the tone for what’s to come. 2025’s Spring Statement was relatively uneventful in terms of radical changes – staying true to Labour’s pledge of only delivering ‘one fiscal event per year’. But nonetheless there remain a few things for businesses – and individuals – to pay attention to as we move into the new financial year.
Changes affecting businesses…
Whilst there were no real shocking new announcements for businesses to pay attention to – the absence of any relief for businesses has been highlighted by commentators. But knowing that the Chancellor remains firm on the trajectory of last year’s autumn budget, businesses need to do a bit of ‘reading between the lines’ to get an idea of what might be coming in the not-so-distant future…
No announced increase to tax – but hikes are coming nonetheless
There were a few analysts expecting the Chancellor to announce an increase to taxes, especially for businesses – so optimists could take the absence of tax hikes as a positive result. But given that we’re just heading into a new financial year and the 2024 Budget announced some of the most aggressive tax hikes and increased costs for employers in a decade – April will mark a few changes that businesses (specifically those who employ people) must be aware of…
- The Secondary Class 1 National Insurance Contribution rate, paid by employers, will rise by 1.2% – from 13.8% to 15%.
- The threshold at which employers start paying National Insurance Contributions for employees will decrease from £9,100 to £5,000.
- The National Living Wage (for aged 21+) will rise by £0.77, to £12.21.
HMRC crackdown on tax avoidance
The Chancellor announced that the government will increase HMRC’s capacity to catch 20% more ‘tax fraudsters’. The sizeable investment will fund ‘expansion and modernisation’ of HMRC, giving way to increased powers and actions. Later this year, HMRC will also launch a new ‘reward’ scheme for informants of serious non-compliance in large corporates and by wealthy individuals.
This news comes alongside other announcements that relate to HMRC, including expanding the rollout of Making Tax Digital to include sole traders and landlords with incomes of £20,000 or more; increasing late payment penalties for VAT taxpayers and income Self-Assessment taxpayers; and confirmed consultations on increased powers to help HMRC tackle tax advisers who are facilitating non-compliance.
Consultations confirmed for future policy changes
Whilst the Chancellor has stayed true to her word, ensuring only one fiscal event each year, the Statement’s accompanying ‘fine print’ confirmed a number of consultations that could affect businesses in the future. These include:
- A consultation on widening the use of advance clearances in R&D tax credits to help reduce error and fraud and ‘improve the customer experience’.
- Two consultations to improve HMRC’s services, including how the organisation can use third party data to make it easier for taxpayers, and how to improve the efficacy of HMRC’s inaccuracy and failure to notify penalties.
Karen Dyer, Director at Foxley Kingham commented:
“Before the Chancellor stepped up to the box, we received the welcome news that inflation had fallen to 2.8% – but that was quickly followed by the OBR halving its forecasted growth expectations for the UK from 2% to 1%. So, there remains a lot for businesses to be anxious about.
The Autumn Budget made it clear that businesses were expected to foot the bill for the Government’s programme of reform and investment for the UK, which has been less than ideal when paired with the continuing lack of disposable income that consumers are facing. But, we see a glimmer of hope behind the cloud. Inflation has dropped and is predicted to decrease long-term. This should result in people having more disposable income which should be better for businesses in general.
Last year’s budget was a shocker, but the Spring Statement has shown us that there will be no change of direction – so it’s more important than ever for businesses to maximise their finances with informed, effective advice.”
Changes affecting individuals…
The Autumn Budget was altogether more positive for individuals than it was for businesses, and we can just about say the same for the Spring Statement. Perhaps the biggest boon is the OBR’s forecast that people will be more than £500 per year better off in the next few years – even taking inflation into consideration – which is wonderful news for individuals and businesses alike. But as is often the case with Government announcements, the devil is in the detail, and there are a few details worth paying attention to.
Widespread welfare reform results in cuts
Far-reaching reforms to welfare will affect recipients in a variety of ways – some will lose support from 2026 onwards, while those in receipt of universal credit payments could receive more. Here are the main reforms announced:
- From April 2026, the standard allowance for Universal Credit will rise from £92 per week in 2025/26 to £106 per week by 2029/30.
- The health element of Universal Credit (which is received if you can’t work because of sickness or disability) will be frozen at its current rate of £97 a week until 2029/30 for existing claimants, and halved for new claimants from April 2026, equating to £50 a week from 2026/27, and frozen at this level until 2029/30.
- The Work Capability Assessment – the test which determines eligibility for the health element of Universal Credit – will be scrapped and replaced by a simpler assessment.
- Personal Independence Payments (PIP) will be tightened in England and Wales from November 2026.
Housing plans announced as stamp duty increases
The Chancellor focussed a sizeable chunk of her Statement on planning reforms and investment to increase the UK’s housing stock – which is great news for first-time buyers and those looking to get on the property ladder. But this comes just a week before Stamp Duty thresholds are set to change – most notably for first time buyers.
As it stands, the existing raised threshold for first-time buyers is £425,000 – but this is set to end this April, when it will be lowered to £300,000. For properties above this value, a 5% Stamp Duty will be required up to £600,000 – less than ideal for those striving to own their own home, for the first time.
Increasing costs
The OBR forecasts that while inflation will fall long-term, it’s going to spike this year, hitting an average of 3.2%. This will likely push interest rates up, which, alongside increases to utilities like water, council tax, and energy, could increase the wider cost-of-living for much of 2025.
This means that individuals, including sole traders, will have to be astute to make the most of benefits wherever possible.
Karen commented:
“The short-term versus long-term outlook for individuals looks quite different. Short-term it’s looking likely that individuals will continue to feel the pinch from increased cost of living, but this will ease off as we move into 2026/27.
The Spring Statement, quite unusually, made no mention at all of pensions, and confirmed that there would be no further increases to taxes. But as this coming April will show us, we are moving into an increasingly taxed landscape and that means those who proactively look after their finances will benefit most.
Getting your ducks in a row, and ensuring you make the most of existing reliefs available can really make a difference – it’s worth having a conversation with a professional to check you’re not throwing money away!”
You can read the full Spring Statement report, here.
Your Foxley Kingham account manager can help if any of the announced changes raise queries or give you reason for concern. If you’re not an existing client of Foxley Kingham, we also offer free initial consultations. To initiate either of the above, get in touch here.