Spring Statement 2025 - Initial Reaction

Following the record tax increases in the Autumn Budget in October 2024, there has been a great deal of trepidation around what further measures would be announced in the Spring Statement. The good news is that the Spring Statement did not include any further short term tax raising measures. The Spring Statement’s announcements on taxation were largely limited to measures aimed to counter tax avoidance, which will be a relief to many. 

The bad news however is that there has not been any reconsideration of the biggest tax changing elements of the 2024 Budget. The changes to the Inheritance Tax reliefs Agricultural Property Relief (APR) and Business Property Relief (BPR), the changes to Inheritance Tax on pensions and the Employers National Insurance increase were not mentioned and thus it seems they will go ahead as planned. Indeed HMRC are undertaking a consultation on the APR and BPR as they apply to trusts, so it does seem that “the lady is not for turning” despite a large amount of pressure from the agricultural sector in particular.

Many businesses and business owners will be concerned about these tax changes, with the increase in National Insurance Contributions due to start very shortly. This change in particular will have a negative impact on the bottom line for many businesses, with the hospitality sector one of those likely to be hit hard.

There was also bad news for the economy, with the OBR reducing its forecast for UK GDP growth in 2025 from 2% to 1%. The Chancellor said that “she was not satisfied with these numbers” and she laid out a series of measures that will cut welfare spending and increase investment in the Defence industry and construction. Per the Chancellor, changes to the national planning policy could take the government a significant way towards its manifesto promise to build 1.5 million new homes.

In the longer term, the OBR believe that some of these investment measures will contribute to higher GDP growth year on year until 2029/30. The Labour government will certainly be hoping that this is the case.