How the Spring Statement 2025 will affect your business
The UK government’s Spring Statement 2025 outlines key fiscal policies aimed at boosting economic growth, supporting businesses, and ensuring long-term financial stability. However, April 2025 marks the implementation of several significant tax and regulatory changes originally announced in the Autumn Budget 2024. In this detailed blog, we’ll break down the key announcements from the Spring Statement 2025, major changes taking effect in April 2025 (from the Autumn Budget 2024) and explore what they mean for your business.
Spring Statement 2025: Key takeaways
Unlike a budget, the Spring Statement did not introduce sweeping tax reforms. Instead, it focused on:
- With inflation stabilising, businesses that raised prices during high inflation may now face customer expectations for price stability. Businesses were urged to prepare for gradual interest rate cuts later in 2025.
- No New Tax Changes Contrary to speculation, no alterations were made to income tax, corporation tax, or VAT rates. The previously announced National Insurance cuts for employees (from 12% to 10%) remain unchanged.
- Business Support Extensions Full expensing (100% capital allowances for qualifying investments) was made permanent, aiding firms investing in machinery and equipment.
- A temporary energy cost rebate was confirmed for eligible SMES, offering up to £5,000 per year to offset high utility bills.
April 2025 Changes from Autumn Budget
While the Spring Statement avoided major announcements, April 2025 brings significant reforms from the Autumn Budget 2024. Here’s what businesses need to know:
1. Changes to National Insurance Contributions (NICs)
As previously announced, April 2025 sees an increase in the main rate of employer National Insurance contributions (NICs) from 13.8% to 15%. Simultaneously, the threshold at which employers start paying NICs will decrease from £9,100 to £5,000 per year.
What this means for your business
While the Employment Allowance will increase to £10,500 and become more widely accessible, many small and medium-sized enterprises (SMEs), particularly those with growing teams, will likely face higher payroll costs.
2. VAT threshold frozen until 2026
The VAT registration threshold remains frozen at £90,000 until at least April 2026. This means businesses with taxable turnover below this amount do not need to register for VAT.
What this means for your business
- No immediate changes for small businesses below the threshold.
- Businesses nearing the threshold must monitor turnover carefully to avoid unexpected VAT registration.
- Potential administrative burden for growing businesses that may need to register in the future.
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3. Changes to Capital Gains Tax and Business Asset Disposal Relief
The Spring Statement reiterated the changes to Capital Gains Tax (CGT) rates that were previously announced.
The basic rate of CGT is now 18%, with higher and additional rates set at 24%. Furthermore, Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) will see its CGT rate increase to 14% from April 2025, rising further to 18% in 2026.
The lifetime limit for Business Asset Disposal Relief remains the same at £1 million.
These changes will impact business owners considering selling their businesses or assets, necessitating a review of exit strategies and potential tax liabilities.
4. Abolition of Furnished Holiday Lets (FHL) regime
Effective from April 2025, the distinct Furnished Holiday Letting (FHL) tax regime is abolished. This means that businesses and individuals operating Furnished Holiday Lets will no longer be able to claim the more generous capital allowances on items such as furniture, fixtures, and equipment that were previously available. These assets will now likely fall under the standard capital allowances rules applicable to other types of property income.
5. Changes to Stamp Duty Land Tax
Changes to Stamp Duty Land Tax (SDLT), initially announced in the Autumn Budget 2024, came into effect on April 1st, 2025, specifically impacting companies purchasing residential property valued at £250,000 or more. The key alteration involves the lower rate band of SDLT being split into two new bands:
- New SDLT bands for companies (Effective April 1st, 2025):
- £0 – £125,000
- £125,001 – £250,000
This restructuring of the lower SDLT band means that companies buying residential properties within the £125,001 to £250,000 price range will likely face a higher SDLT liability compared to the previous single lower rate band.
6. Increase in National Living Wage (NLW)
The National Living Wage (NLW) will rise to £12.21 per hour from April 2025 (up from £11.44). A full-time worker’s annual pay on the NLW rises from £22,308 to £23,810.
What this means for your business
- Higher payroll costs, particularly for sectors reliant on low-wage workers (e.g., hospitality, retail).
- Potential need to adjust pricing to offset increased labour expenses.
- Improved employee retention if wages are more competitive.
7. MTD for Income Tax: New timelines & exemptions
The Spring Statement 2025 confirmed the phased rollout of MTD for Income Tax:
April 2026: Mandatory for sole traders/landlords with income over £50,000.
April 2027: Threshold drops to £30,000
April 2028: Applies to those earning over £20,000.
Extended exemptions now include:
- Non-UK resident entertainers/sportspeople (if no other MTD-liable income).
- Taxpayers with a power of attorney or where HMRC “can’t provide a digital service.”
Deferred until April 2027:
Lloyd’s underwriters, SA109 filers (residence/remittance basis), and recipients of Married Couple’s Allowance or Blind Person’s Allowance.
8. Stricter penalties for late MTD payments
Starting in April 2025, the government is increasing penalties for VAT and Self Assessment income taxpayers who pay late, coinciding with their entry into Making Tax Digital.
New penalty structure (Effective 6 April 2025):
- Still no penalty for payments made within 14 days
- 3% charge on amounts outstanding after 15 days
- A further 3% added for balances remaining unpaid after 30 days
- 10% charge after 31 days.
How to prepare your businesses for the changes?
- Review payroll systems for NIC changes.
- Plan capital investments to utilise full expensing.
- Check eligibility for extended reliefs (business rates, RLS).
- Prepare for wage increases and adjust budgets.
- Explore green energy grants for long-term savings.
Final thoughts
At Affinity Associate, we recognise that periods of fiscal change can bring about both uncertainty and opportunity for business owners. Whether you require meticulous planning for the upcoming changes, our accountants will ensure seamless compliance with the latest tax changes. Schedule a free consultation with us to learn how we can help you stay on top of these changes.
