Welfare Reforms & Employment Incentives
A major focus this year is on reducing welfare dependency and supporting people back into work. The government is investing £1 billion into tailored employment support services. For businesses facing recruitment challenges, this presents an opportunity to tap into a broader pool of candidates. Industries struggling with staffing shortages may want to reassess their hiring strategies in light of this increased support.
HMRC Crackdown on Tax Evasion
The government is intensifying efforts to combat tax evasion, aiming to raise an extra £1 billion. This includes hiring 500 additional HMRC compliance officers and 600 debt management staff, alongside £87 million earmarked for tax debt recovery.
With tax compliance under tighter scrutiny, businesses must ensure their records, filings, and financial systems are watertight. A new whistleblower reward scheme will also launch in 2025, encouraging the public to report tax evasion, with rewards linked to the amount of tax recovered.
Key takeaway: Review your internal financial processes and speak to your accountant to ensure full compliance.
Increased Defence Spending: Opportunities Ahead
The Statement also outlined a significant boost in defence funding, with an additional £2.2 billion allocated to the Ministry of Defence. This could create new opportunities for companies operating in tech, manufacturing, and engineering sectors. Businesses in these fields should keep an eye out for potential government contracts or collaborations.
Updated Economic Outlook
The Office for Budget Responsibility (OBR) has revised its forecast for the UK economy. Growth for 2025 is expected at 1%, with a more optimistic 1.9% forecast for 2026. Inflation is projected to average 3.2% this year, falling to 2.1% by 2026.
For businesses, this means managing short-term cost challenges while preparing for more stable conditions ahead. Careful budgeting and forward planning will be essential.
Infrastructure & Housing Developments
A substantial £13 billion has been pledged for capital infrastructure projects over the next five years, with a further £2 billion for affordable and social housing.
This presents clear opportunities for businesses in construction, real estate, and the trades. Sole traders such as electricians, plumbers, and builders may see increased demand as these projects get underway.
Changes to VAT Late Payment Penalties
From 6 April 2024, late payment penalties for VAT will rise:
– 0–14 days late: No penalty
– 15–29 days: 3% of outstanding VAT (up from 2%)
– 30+ days: 3% at day 15, plus an additional 3% at day 30
– Ongoing late payments: An additional 10% annualised penalty applies
These changes will also apply to Making Tax Digital (MTD) for Income Tax from April 2026.
Making Tax Digital (MTD) Updates
It’s now confirmed that all self-employed individuals and landlords with qualifying income above £20,000 must comply with MTD rules. Those earning over £50,000 remain on track for MTD compliance from April 2026. There are still no confirmed dates for partnerships or Corporation Tax under MTD.
Child Benefit Reporting Reforms
From Summer 2025, it is expected that employees will be able to report Child Benefit directly to HMRC and pay any High-Income Child Benefit Charge (HICBC) via PAYE. This change may eliminate the need for many individuals to complete a Self Assessment solely for this purpose.
No New Tax Rises
There’s some relief for business owners—there were no new tax increases announced in this Spring Statement. This allows for a period of financial predictability. However, previously announced changes to Employers’ National Insurance Contributions (NIC) remain in place, including the rise to 15% and the lowering of the employment allowance threshold from £9,100 to £5,000.
Opposition Response
Shadow Chancellor Mel Stride expressed disappointment with the Statement, criticising it for not doing enough to tackle the economy’s core challenges. He highlighted the continuing pressure on small businesses and the need for stronger growth-focused policies. This reinforces the need for businesses to remain agile and prepared for change.
Final Thoughts & Our Advice
In light of these updates, we recommend that all businesses:
– Stay Compliant: Ensure your tax and financial records are up to date and in line with HMRC requirements.
– Plan Strategically: Prepare for inflation and take advantage of any longer-term opportunities the current forecasts might bring.
– Explore Government Spending Opportunities: Especially if you’re in recruitment, defence, or infrastructure-related industries.
– Remain Informed: Engage with your accountant regularly to adapt quickly to future changes.
At Aksons, our team is here to support you through every economic update. If you have questions about how the Spring Statement might affect your business or would like tailored financial advice, please get in touch.