Welcome to our Spring Statement review for the 2025/26 tax year. On 26 March 2025, Chancellor Rachel Reeves presented a Spring Statement that contained no immediate tax hikes or cuts but confirmed several important policies that affect the business community. Although it was a relatively low-key event on the surface, the government used it to share updated projections and set the tone for the Autumn Budget. This Spring Statement review explores the main announcements and outlines how they could shape your business decisions in the coming months.
Below, we provide an overview of the outlook for economic growth, public spending and tax compliance. We also discuss practical steps businesses can take right now to plan ahead. If you have questions about how the policies might affect your accounts or your wider business strategy, we are here to help.
Spring Statement overview
The Chancellor chose to maintain her pledge of introducing major tax changes only once a year. As a result, the Spring Statement offered no new tax rates or allowances. Instead, the government’s focus was on reconfirming public spending priorities, refining guidance for Making Tax Digital (MTD), and highlighting proposed enforcement measures through HM Revenue & Customs (HMRC). Key points included the following.
- Steady approach to taxation: No new tax rates, thresholds or duties were introduced at this event. Existing allowances, such as the personal allowance, remain frozen until April 2028.
- Public finances: According to the latest Office for Budget Responsibility (OBR) figures, net debt is expected to remain high (above 80% of gross domestic product (GDP)) but should start falling from 2027 onwards. The government still aims to balance day-to-day spending by 2029/30.
- Spending priorities: Extra funding for defence, infrastructure and housebuilding was confirmed, with a view to boosting growth and developing key sectors.
- Compliance and enforcement: HMRC is stepping up its focus on late payment penalties and investing in more staff to improve overall tax compliance, emphasising that accurate record-keeping is essential for all businesses.
Economic outlook and growth
The OBR adjusted its GDP growth forecast for 2025 to around 1%, down from 2% last autumn. International factors, such as global interest rate rises and ongoing trade disruptions, weigh on short-term prospects. On a more optimistic note, the OBR upgraded growth estimates from 2026 onward, suggesting that as inflationary pressures ease, the UK could see a moderate upswing in activity.
According to the Office for National Statistics (ONS), economic output had ticked up by 0.3% in early 2025 compared to late 2024. While this is relatively modest, it reflects cautious consumer confidence and some resilience among service-based industries. For businesses, the message is to plan for steady growth rather than a swift boom. If the UK economy follows the OBR’s improved medium-term outlook, demand could strengthen from 2026 onwards.
Public spending highlights
- Defence and security: The government committed an additional £2.2bn to defence in 2025/26. This money is designed to accelerate new technologies and modernise the armed forces, with the potential to create business opportunities in advanced manufacturing and related supply chains.
- Infrastructure: A further £13bn in capital investment is allocated to transport, digital connectivity and local amenities. The Chancellor hopes these projects will encourage private investment and strengthen productivity. Firms in construction, engineering and technology may find scope for new contracts or partnerships.
- Housebuilding: Housebuilding has been earmarked as a major priority, with reforms aimed at speeding up planning approvals. If everything proceeds as planned, up to 1.5m homes could be built over the course of this Parliament. For businesses involved in construction or property services, this could translate into new growth opportunities.
Tax measures and compliance initiatives
Although the Chancellor held off on changing tax rates, the Spring Statement documents released by HMRC include measures that businesses should keep on their radar.
- Late payment penalties: HMRC is revising its penalty framework to unify how late filings and late payments are treated across different taxes. The key takeaway is to submit returns on time and ensure cashflow is in place for prompt payment, as penalties for persistent lateness will be more severe.
- Making Tax Digital expansion: MTD is extending in phases to cover more self-employed individuals and landlords. From April 2026, those with incomes above £50,000 must adopt MTD rules, followed by those above £30,000 from April 2027, and those above £20,000 from April 2028. Businesses should confirm that their software can handle digital links and direct APIs.
- Research and development (R&D) eligibility consultations: HMRC is considering an advance clearance service to confirm whether specific R&D projects qualify for relief. If adopted, this could remove some of the guesswork around claims.
These measures indicate a continued emphasis on digital record-keeping and better tax compliance. If your existing systems rely heavily on manual processes, it might be prudent to plan an upgrade ahead of your relevant MTD deadline.
Implications for individuals
While most personal tax thresholds stay frozen until April 2028, that freeze can cause more people to enter higher tax bands if their incomes rise. On the bright side, inflation has been trending down, sitting at around 2.8% in February 2025, meaning the cost-of-living squeeze could start to ease.
The phased expansion of MTD offers some time to adjust for those who are self-employed or rent out property. However, you should keep a close eye on the relevant deadlines to avoid last-minute surprises. When it comes to benefits or welfare assessments, the government is examining how to remove certain disincentives for people with long-term health conditions, so public-sector reforms could eventually affect workforce participation.
Implications for businesses
- No immediate tax changes: For many small and medium-sized enterprises (SMEs), the pause on new tax rates provides short-term stability. You have a chance to plan cashflow, investments and hiring without worrying about abrupt fiscal changes.
- Opportunities in construction and infrastructure: The expanded housebuilding programme and new infrastructure projects could spark growth across the supply chain. Construction, engineering, tech and financial services might see an uptick in tenders and contracts.
- Tightening compliance environment: HMRC’s plan to increase staffing and adopt a tough stance on late payments means businesses must take deadlines seriously. Consider investing in technology and internal processes to keep track of your filings and reduce the likelihood of fines.
- Future Budget considerations: The Autumn Budget 2025 could introduce fresh measures to keep the government’s promise of balancing the books by 2029/30. That might include extending the freeze on tax thresholds or modifying existing reliefs. Stay informed and be ready to adjust.
Looking ahead to the Autumn Budget
Because the Chancellor pledged to unveil major tax changes only once a year, the next pivotal date is the Autumn Budget 2025. If growth remains lower than hoped, the government might decide to tweak income tax or corporation tax thresholds, introduce targeted levies or explore new ways of encouraging business investment. We recommend:
- reviewing cashflow projections for the remainder of 2025/26
- updating your compliance strategy to incorporate digital tax and filing requirements
- maintaining good financial records and seeking advice early if you anticipate complex R&D or capital allowance claims.
By the time the Autumn Budget arrives, you will be better placed to act on any changes. We also suggest monitoring official government resources – you can find important guidance on HMRC’s official website and verify company filings through Companies House.
We’re here to help
In this Spring Statement review, we have outlined the policies likely to influence businesses for the 2025/26 tax year. A measured economic outlook, steady tax environment and targeted spending on construction and defence create a landscape of both stability and potential growth. Meanwhile, HMRC’s focus on compliance means it is wise to be organised and proactive.
Ready to discuss your 2025/26 strategy with a trusted adviser? We can help you interpret these developments and prepare for the Autumn Budget.
Contact us at Thompson Wright to book a meeting or speak with our team about your finances. You can also visit our services page to learn how we can support your business.