Spring Statement 2025 – What Business Owners Need to Know
Top Takeaways for UK SMEs and Tax Advisors:
Growth & Investment
- £2B pledged for social & affordable housing, aiming to deliver 1.5M homes.
- £625M skills package to boost construction workforce.
- Full expensing for new plant & machinery continues, including EV infrastructure.
Making Tax Digital (MTD) Expands
The rollout of MTD for Income Tax will be expanded to include a wider range of small businesses and will operate as follows:
- It will start from April 2026 for sole traders and landlords with qualifying incomes over £50,000.
- It will extend to those with qualifying incomes over £30,000 in April 2027.
- It will extend again to those with qualifying incomes over £20,000 from April 2028.
- Enhanced penalties for late VAT & tax payments incoming from April 2025.
Business & Employer Impacts
- Employer NICs rise from 13.8% to 15% (April 2025).
- Employment Allowance doubles to £10,500—broadening eligibility.
- FHL regime abolished from April 2025—watch for CGT & pension implications.
- National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from 1 April 2025. The rates: Apprentices £7.55, 16-17 years old: £7.55, 18-20 years old: £10.00, NMW £12.21.
Company Cars & Vans
- BIK rates for company cars rise in 2025/26:
• Zero-emission cars increase from 2% to 3%
• All other cars increase by 1%
• Max benefit charge remains capped at 37% - Car fuel benefit charge increases to £28,200
- Van benefit rises to £4,020, with fuel benefit at £769
- Double Cab Pick-ups (DCPUs) will be treated as cars for tax from April 2025, affecting capital allowances and benefit-in-kind treatment.
Capital Gains & Corporation Tax
- CGT on most disposals rises to 18%/24%.
- BADR increases to 14% (2025), 18% (2026).
- Corporation Tax: No changes at 25% for profits above £250,000, Small Profits Rate at 19% for profits below £50,000, with marginal relief between these thresholds.
- Non-Dom Overhaul
- Domicile-based tax rules replaced by residence-based system from April 2025.
- Big changes for IHT and remittance basis users—early planning is key.
Other Notables
- National Minimum Wage for 2025-26 is £12.21 per hour, for 18–20s jumps 16.3% to £10/hour & Apprentices £7.55.
- Private school fees lose VAT exemption from Jan 2025.
- The VAT registration threshold stays at £90k & the deregistration threshold at £88k.
- Inheritance Tax reliefs capped: 100% on first £1M, 50% thereafter.
- The Income Tax personal allowance is fixed at the current level of £12,570 until April 2028.
- The Annual Investment Allowance limit remains at £1 million.
- Pension Tax Limits – Annual Allowance (AA) stays at £60,000.
- Self-employed people with profits of £6,845 get State Pension Credit. NICs are: Class 4 self-employed 6% & Class 2 is 2% from 6 April 2025. Voluntary Class 2 & Class 3 NIC rise to £3.50 & £17.75 per week respectively.
Clarity and early planning will be critical to managing these changes effectively. If you’d like support reviewing your tax position or adapting your forecasts, We’d be happy to help: If you need it, book a meeting or contact us.
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