Spring Budget 2025: Key Takeaways for Businesses and Individuals
The Spring Budget 2025, delivered by Chancellor Rachel Reeves, came as expected, light on new tax measures but highlighting ongoing economic challenges. With growth forecasts revised downward and the highest tax burden in 70 years, the focus was on economic stability rather than drastic changes. The budget reaffirmed the government’s commitment to long-term fiscal responsibility while acknowledging the pressures facing both businesses and individuals. Here are the key points you need to know.
1. Tax and Compliance: Staying the Course
- Frozen Tax Thresholds: Income Tax and National Insurance thresholds remain frozen, pushing more taxpayers into higher brackets through fiscal drag. This means increased tax burdens as wages rise.
- Making Tax Digital (MTD) Expansion: From April 2026, MTD for Income Tax will include self-employed individuals and landlords earning over £50,000, with further extensions planned. Digital compliance is becoming increasingly important.
- Capital Gains Tax (CGT): Rates increased to 18% (basic rate) and 24% (higher rate) for most disposals, aligning with residential property rates.
- Inheritance Tax (IHT): The nil rate band remains frozen at £325,000 until 2030, with pension funds entering IHT from 2027. Strategic estate planning remains crucial.
2. Government Spending and Economic Outlook
- Defence Spending Boost: Increasing to 2.5% of GDP, funded by cuts to overseas aid.
- Welfare Reforms: A more “pro-work” approach, including a freeze on Universal Credit health elements and stricter eligibility checks.
- Housing and Skills Investment: £2 billion allocated for affordable housing and £625 million for construction skills, addressing long-term growth challenges.
3. What Businesses Should Do Now
- Plan for Compliance: Invest in digital accounting solutions to meet MTD requirements.
- Tax Efficiency: Review salary sacrifice options and explore pension contributions to mitigate tax impacts.
- Finance Strategies: Consider alternative lending options as traditional banks may tighten terms amid low growth forecasts.
The Spring Budget 2025 reinforced the importance of strategic financial planning. While the changes are subtle, they indicate a continued focus on compliance and stability, leaving businesses and individuals to prepare for potential future shifts.
At Sedulo, we’re here to help you navigate these changes and make informed decisions. Get in touch to discuss your specific needs.
