The Chancellor’s Spring Statement

The 2025 Spring Statement has attracted significant media attention, dominating discussions across the press, social media, and among business communities nationwide. Below are the key takeaways that we believe will be of particular interest to you.

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CGT and BADR Updates:

The previously announced changes to Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR) have been confirmed. Business owners looking to sell a company or assets should consult with professional advisors to understand how these changes may affect their transaction. The basic CGT rate is now 18%, with higher and additional rates set at 24%. Trustees and personal representatives will also be subject to the 24% rate. For disposals where BADR applies, the tax treatment differs depending on the timing. Disposals made between 6 April 2025 and 5 April 2026 will be charged at a reduced CGT rate of 14%. However, disposals from 6 April 2026 onwards will attract a CGT rate of 18%. It's worth noting that, as announced in the Autumn Budget, the lifetime cap for Investors’ Relief has been significantly reduced from £10 million to £1 million.

Infrastructural Challenges:

The government's changes to planning and housing, particularly for those in the property sector, are raising concerns about the adequacy of the infrastructure to support these initiatives. Speculation suggests that, without the necessary skilled workforce and access to building materials, the promised improvements may not materialise as expected. With global supply chain pressures, workforce shortages, and ongoing trade tensions, it remains to be seen whether the support needed for these projects will be in place. Property professionals will be closely monitoring how these global developments impact their sector and whether the proposed investments will yield tangible results.

Greater Scrutiny from HMRC:

Business owners can expect increased scrutiny from HMRC, as more resources are being allocated to ensure taxes are thoroughly accounted for. It’s been reported that for every £1 invested in HMRC, the return on investment is £10. This could mean more investigations, audits, and potentially new powers for HMRC. SMEs, in particular, should be aware that the tax gap between what HMRC expects to collect and what is actually collected is notably larger for small and medium-sized companies than for larger corporations. As a result, HMRC is likely to focus more on investigating tax errors, mistakes, and potential evasion among SMEs, as they stand to recover a higher proportion of unpaid taxes.

Making Tax Digital for Income Tax:

For those still using spreadsheets for accounting, now may be the time to switch to digital accounting software! Starting in April 2026, Making Tax Digital (MTD) for Income Tax will become mandatory in phases for landlords and self-employed individuals earning over £50,000. In April 2027, the threshold will drop to £30,000, and by April 2028, it will be further reduced to £20,000. This means a large number of people who were previously outside the MTD net will be affected and will need to consider whether operating as a sole trader remains the best legal structure for them under these new requirements.

Employment Changes:

Several significant employment-related changes are impacting businesses, including the rise in National Insurance, an increase in the National Minimum Wage, and the Employment Rights Bill, which is currently in the report stage in the House of Commons. Some businesses have adjusted or paused their recruitment strategies, while others are exploring opportunities to expand their workforce abroad. Reports suggest that the changes in employment laws could cost employers an additional £615 per employee. The evolving landscape is creating a sense of uncertainty, as businesses weigh the impact of these new policies on their operations.

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Overall, there seems to be a lack of confidence in the direction the UK economy is heading. As economies are built on confidence, the coming months will be critical for assessing the stability of UK businesses and the broader economic environment.

For a comprehensive update on the Spring Statement, visit the Government’s Spring Statement 2025 Collection here.

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