As we approach the Spring Statement 2025, taking place on 26 March, businesses and individuals alike are keen to understand what the Chancellor's forecast might entail. 

With the commitment to just one major fiscal event per year, the Spring Statement is expected to provide an update on the economic outlook without introducing significant tax policy changes.

This forecast will be crucial in understanding the government's financial strategy, especially given the slower-than-expected economic growth and increased government borrowings since the last Budget.

Why the Uncertainty?

The economic landscape has been volatile, with changes in both the global economy and geopolitical environment since the last forecast. The Chancellor, Rachel Reeves, has committed to self-imposed fiscal rules, aiming to balance the budget by 2029-30. However, with limited fiscal headroom and numerous variables at play, there is speculation on whether the government can adhere to these rules.

Considerations for Businesses and Individuals

Businesses and individuals should prepare for potential changes in tax policies and spending. The Corporate Tax Roadmap released alongside the Autumn Budget 2024 promised numerous consultations in Spring 2025, which could lead to significant updates. Staying informed and proactive will be key to navigating any new developments.

Potential Changes to Tax Policy

While the Spring Statement is not anticipated to introduce new tax policies, there are a few areas to watch:

1. Tax Allowances and Thresholds: There may be an extension of the current freezes on personal allowances and thresholds beyond 2028. This could result in more individuals being pulled into higher tax brackets as their incomes rise.
2. Inheritance Tax (IHT): The freeze on the nil rate band (NRB) for IHT purposes, currently set at £325,000, is expected to continue until 2030. This, combined with changes to the IHT treatment of pensions, may prompt individuals to consider making financial gifts during their lifetime.

Spending Cuts vs. Tax Increases

Given the economic challenges, the government may need to decide between further tax increases or spending cuts. With the Labour manifesto pledging not to raise income tax, employee National Insurance (NI), VAT, or corporation tax, spending cuts seem more likely.

Will There Be a Tax Administration and Maintenance Day?

Following recent traditions, it is likely that the Government will hold a Tax Administration and Maintenance (TAM) Day. This day is expected to focus on consultations and updates related to tax administration, providing further clarity on the Government's fiscal plans.

Conclusion

While the Spring Statement may not bring immediate changes to tax policy, it remains an important event for understanding the government's economic direction. Staying informed about potential changes allows for better financial planning and decision-making. 

Jerroms will continue to provide updates and insights to help you navigate these developments. 

If you have any queries, please get in touch or reach out to your usual Jerroms contact.

Authored by Kate Moon, Tax Director

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