Spring Statement 2025: What to Expect

If you’re a small business owner in the UK, mark Wednesday 26th March on your calendar! That’s when Chancellor Rachel Reeves will deliver the Spring Statement, giving an update on the country’s finances.

While not as significant as the Autumn Budget, this statement could still hint at important changes that may affect your company. Here’s what we think will likely be on the cards.

Growth Slow, Inflation High

Sadly, the British economy isn’t growing as fast as many had hoped. The Office for Budget Responsibility (OBR) has lowered its growth forecast for this year to just 0.75%, down from an earlier estimate of 1.5%.

Inflation is also higher than expected at 3% - above the Bank of England’s target.

Slower growth means less Government income from taxes and more pressure on private businesses to fill the gap. Expect the Chancellor to focus on stimulating growth, but watch for potential tax changes.

National Insurance on the Rise

If you have employees, this one’s for you. National Insurance Contributions are set to rise from 6th April 2025, with employer NICs increasing to 15% for salaries above £5,000.

If you have 10 employees earning £30,000 each, your annual NICs bill will jump by an extra £3,900. That’s all money you’ll need to factor into your financial planning.

Now is the time to streamline operations and look at cost-efficiency improvements to manage costs effectively.

Tax Brackets Still Frozen

Another key issue is income tax. While rates aren’t expected to rise this time, thresholds have been frozen until 2028. This means that as wages increase, more people will move into higher tax bands - a phenomenon known as ‘fiscal drag.’

For small businesses, this could mean your staff get less take-home pay from the same salary. If you plan to review your team’s wages, this is something to bear in mind.

Stamp Duty Relief Due to Expire

If your company is investing in property, you should monitor news on stamp duty.

The temporary relief, which raised the threshold for paying tax, is due to expire in April 2025. If Rachel Reeves doesn’t extend it, buying property could become significantly more expensive.

Inheritance Tax Changing

If you’re considering passing your business on, be aware that inheritance tax relief on agricultural and business assets over £1 million is set to change from April 2026. Everything above £1 million will be taxed at 20% rather than being fully exempt as it was previously.

This change could make succession planning more expensive for family-run businesses, so it’s worth speaking to a financial advisor sooner rather than later.

Cash ISAs up for Review

There’s talk that the Government might tweak cash ISAs, potentially reducing the tax-free allowance or encouraging savers to invest in stocks and shares instead.

While these changes won’t impact your business directly, they could affect consumer spending power.

What Can You Do to Prepare?

1. Review Your Payroll Costs – With NICs increasing, consider where optimisations can be made without compromising quality.

2. Plan for Tax Changes – Keep an eye on income tax thresholds and be ready for potential changes in business taxes.

3. Consider Your Property Strategy – Property purchases could become more expensive if stamp duty relief ends.

4. Seek Advice on Succession – Inheritance tax changes could impact how you pass on your company.

5. Watch for Incentives – The Government may introduce measures to boost investment or encourage hiring, so be ready to take advantage.

Looking Ahead

While the Spring Budget isn’t expected to introduce significant policy changes, it will set the tone for the financial year ahead. The cost of running a small business is already on the rise, and with the prospects of economic growth being downplayed, now is the time to plan.

We’ll know more on Wednesday 26th March, but in the meantime, keeping an eye on these key areas will help you prepare to make informed business decisions.

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