Today’s Spring Statement was not expected to contain any significant new policies or tax changes. Chancellor Rachel Reeves has confirmed that this is likely in the 2025 Autumn Budget however.
For now, the Chancellor has used this event to outline her immediate plans for the UK economy, taking into account a 50% predicted economic growth reduction by the Office for Budget Responsibility (OBR). This is not surprising given that April will bring the largest tax increase to affect business owners for nearly a decade, with the rises to employer’s NICs coming into effect. In addition, restrictions to the value of Business Asset Disposal Relief become operational with a new 14% capital gains tax rate for exiting business owners.
Key points in 2025 Spring Statement
What is the UK’s revised growth forecast? Growth for 2025 has been halved (from an expected 2% to 1% growth), but estimated growth for the next four years has been upgraded. The OBR has released a forecast of 1.9% growth in 2026, 1.8% in 2027, 1.7% in 2028 and then 1.8% in 2029.
When is inflation predicted to reach 2% target? Inflation rates are rising, with an average 3.2% rate forecast in 2025, up from the earlier 2.6% rate forecast. The Government then expects inflation to drop to 2.1% in 2026 and reach the main 2% rate target in 2027.
Are the government revising their new home goal? Construction industry business owners will be boosted by the reforms to planning policy and a target to build over 1.5m new homes. To support anticipated increased demand for tradespeople needed to deliver this goal, over £600m is being allocated to training for a new generation of 60,000 construction workers.
What is happening to defence spending? Defence industry spending will increase by over £5bn in 2026, with a focus on drones and AI technology. This represents an extra £2.2bn budget allocation from forecast levels. The increased funding will be resourced by reducing overseas aid from 0.5% to 0.3% of gross national income in 2027, and from the Treasury’s reserves.
How will the public sector be impacted? Public sector administrative costs are to be reduced by 15% by 2030. This will include the loss of around 10,000 civil service across functions like HR, policy advice, communications and office management.
The Chancellor did hint in her speech that there may be tax increases or at least, changes to existing tax policies coming in the 2025 Autumn Budget. No details were provided, we will have to wait and see over the coming months, but we can ‘guestimate’ some of the changes that are most likely.
In the meantime, it would be prudent for every taxpayer to ensure that they are making the most of existing tax rates and tax relief opportunities whilst they remain available.
If you would like to discuss any aspect of tax planning please contact partners@rjp.co.uk.