Viewpoint: Spring Statement 2025 - Opportunities and Obstacles in the New Fiscal Landscape

Spring Statement 2025: Opportunities and Obstacles in the New Fiscal Landscape

As the dust settles on the Spring Statement 2025, and with the Autumn Budget still fresh in our minds, it's imperative to take a holistic view of the evolving economic landscape. The Chancellor stated that she remains committed to one major fiscal event a year to give families and businesses stability and certainty on upcoming tax and spending changes and, in turn, to support the government’s growth mission. Crucially, while there were no major tax announcements, tax is only one side of the equation, and the Spring Statement confirmed a number of the spending measures. As an accountancy firm dedicated to guiding our clients through these complexities, we recognise that these shifts demand a proactive and adaptable approach, ensuring both businesses and individuals are well-positioned to navigate the changing terrain.

Indeed, Phil Grainger, our Managing Director, emphasises the importance of this perspective: "Providing strategic advice that considers corporate strategy, business planning, and personal wealth management is at the heart of our firm's mission. As such, we view the Spring Statement in light of the long-term implications of the Autumn Budget. The additional £2.2 billion of funding for the Ministry of Defence next year, and the £2 billion for social and affordable housing for 2026/27, signify a commitment to key sectors that could drive economic activity. However, businesses need to be prepared to adapt to potential shifts in market demand and supply chains."

Moreover, the Spring Statement highlights significant opportunities for businesses in the defence sector, particularly in areas like AI, drones, innovation, and dual-use technology. Companies in engineering, security, cyber, or defence-adjacent tech should consider leveraging these opportunities through business contracts and R&D grants. Additionally, with £13 billion in capital investment on the horizon, businesses in property, trades, training, or tech should start exploring partnerships, funding, and skills pipelines now.

On the compliance front, tax enforcement is ramping up, with HMRC bolstering its staff and introducing stricter penalties. The expansion of Making Tax Digital (MTD) for Income Tax also underscores the need for businesses and wealthier individuals to be digitally ready. Our team are poised ready to assist clients who need support ensuring compliance and streamlining of their tax processes, in this transition. Furthermore, considering tax investigation insurance, could be prudent to mitigate increased scrutiny.

However, the increased rates of the National Living Wage and National Minimum Wage will come into force from 1 April 2025. NLW will be £12.21, 18–20 will be £10.00, 16-17 & apprentices will be £7.55 each. With an ever-increasing cost to run a business, Andy Webb, our Business Services Director, points out, "For SMEs, the balancing act between managing rising wage costs and maintaining competitiveness is critical. While the increased Employment Allowance—now expanded to all eligible employers with employer NIC bills—offers some relief, careful workforce planning and productivity enhancements are essential."

Moreover, Andy highlights the importance of preparing for the expansion of Making Tax Digital (MTD) for Income Tax. "As MTD extends to more small businesses from April 2026, SMEs need to ensure they are digitally ready. Our team is here to support them in this transition, ensuring compliance and streamlining their tax processes." As the document states, it will start from April 2026 for sole traders and landlords with qualifying incomes over £50,000, extending to those with qualifying incomes over £30,000 in April 2027.

On the personal tax front, Simon Boxall, our Personal Tax Director, notes that MTD will also impact individuals who file self-assessment tax returns. "The rollout of MTD for Income Tax will require individuals to adapt their tax reporting processes. Our expertise will help them navigate these changes smoothly, ensuring they remain compliant and optimise their personal tax strategies." Further to this note, Simon draws attention to the significant changes to the tax regime relating to non-UK domiciled individuals. "With these changes and the freeze on tax bands, our private clients need personalised tax advice to navigate these changes effectively and maintain their financial security." For instance, the new regime based on residence, providing 100% relief on foreign income and gains for new arrivals to the UK in their first four years of tax residence, could significantly impact personal wealth management.

For corporate businesses, maintaining compliance and transparency remains paramount. Colin Hamilton, our Corporate Services Director, emphasises, "As corporate businesses navigate the implications of these fiscal announcements, our expert guidance on audit and assurance ensures they can uphold transparency and integrity in their financial reporting."

Kath Van Eyken, our Corporate Tax Director, adds, "Beyond compliance, larger businesses should explore schemes such as R&D tax credits, capital allowances, and other available incentives to strategically manage their tax positions. The changes in Capital Gains Tax rates for individual business owners, with the basic rate increasing from 10% to 18% and the 20% rate increasing to 24% for disposals made on or after 30 October 2024, also warrant careful consideration when planning any future investments and disposals. Our corporate tax expertise will help clients optimise their tax strategies and support their business growth "

Finally, as we look towards the long term, estate planning becomes increasingly critical. Malcolm McKinnell, our Founder and Estate Planning Director, explains, "The continued freeze on Inheritance Tax nil rate bands and the limit on agricultural and business property relief highlight the need for proactive estate planning. Our services are designed to help clients protect their legacies and ensure their wishes are respected, even as tax landscapes evolve." From 6 April 2026, agricultural and business property will continue to benefit from the 100% Inheritance Tax relief up to a limit of £1 million. For private clients, reviewing their estate plans in light of these changes can help ensure that their wealth is transferred efficiently and in accordance with their wishes.

The Spring Statement 2025 and the Autumn Budget collectively present a complex yet navigable landscape. At Ward Williams, we're here to provide the expert analysis, guidance, and support our clients need to not only survive but thrive in this dynamic environment.

Useful information:

For more information, get in touch with our accounting experts on 01932 830664 or enquiries@wardwilliams.co.uk ; or visit www.wardwilliams.co.uk

 

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