Spring Statement 2025 – Private Client Forecast

The Spring Statement will take place on Wednesday, 26 March 2025, in the House of Commons.

This statement primarily allows the Chancellor of the Exchequer, Rachel Reeves, to present the latest economic forecasts from the Office for Budget Responsibility (OBR).

Labour have previously stated that there will only be one major fiscal event per year, which has already taken place as the Autumn 2024 budget; as such, in usual circumstances no major tax announcements would be expected.

However, if the OBR forecasts are particularly bleak, there may be a greater chance of the introduction of unexpected tax changes.

What tax changes might there be? If any?

In the Autumn Budget 2024, Reeves announced an increase to Employers NIC of 1.2%, alongside the reduction of the starting threshold meaning that, along with the increase in the National Minimum Wage, has caused a lot of concern about the cost of employing and recruiting staff once the rules come into effect on 6 April 2025. There has been some speculation that these rules may be tweaked, with a view to them having less of an impact.

Further changes to inheritance tax

With the Labour party manifesto promising they will not raise taxes on working people, there are limited ways for the Chancellor to raise revenues. In the Autumn Budget 2024 they announced proposals to significantly reduce the reliefs available from inheritance tax for agricultural and business property. We think it is possible that the Chancellor may make further changes to IHT, perhaps by extending the “7 year tail” for lifetime gifting.

Reduced cash ISA limits

There have been suggestions that the cash ISA limit may be reduced from the current limit of £20,000 of contributions per tax year to £4,000. There is no suggestion that the Stocks and Shares ISA limit may also be reduced, but it shouldn’t be ruled out. Those concerned with this should consider making sure they have maxed out their 2024/25 ISA limits ahead of any reduction for 2025/26.

Softening of Temporary Repatriation Facility (TRF)

The Chancellor recently indicated potential changes to legislation to enhance the TRF for non-doms repatriating funds.

Although initial amendments fell short, further changes could still occur and be announced.

Increasing the personal allowance

With the income tax personal allowance and other thresholds having been frozen for many years, more and more people are being dragged into the tax net. With the triple lock on pensions regularly increasing the state pension, thousands of pensioners are being dragged into the tax net and the requirement to submit self-assessment tax returns. Logic would suggest that an increase in the personal allowance would be a popular move and one which would reduce the admin burden for HMRC having to process so many tax returns. However, if the nation’s finances are as bad as is predicted by some, this may not be affordable to the Chancellor at this time.

There is a lot of uncertainty but we will continue to monitor developments closely and provide updates as necessary.

If you would like to discuss the Spring Statement, please get in touch.