Last week, Chancellor Rachel Reeves delivered her first Spring Statement, set against a backdrop of sobering economic revisions from the Office for Budget Responsibility (OBR).
The message? Caution, stability and a long game.
While the Statement stopped short of major fiscal changes, it signalled a clear intention to restore credibility, exercise restraint, and prepare for future growth – with important implications for business owners.
Here’s what you need to know.
Slower short-term growth, stronger long-term outlook
The OBR now forecasts UK GDP growth of just 1% in 2025, a sharp downgrade from the 2% projection made in last year’s Autumn Statement. However, this is balanced by improved growth expectations for the years between 2026 and 2029, pointing to a more positive long-term trajectory.
Inflation is expected to average 3.2% this year, before falling back to 2.1% by 2026 – a slight upward revision on previous forecasts, but still broadly within the Bank of England’s target range.
These changes mean public finances were on track to breach the government’s own fiscal rules, prompting speculation around potential tax increases or spending cuts. Instead, the Chancellor opted for a measured response aimed at preserving fiscal discipline without stifling recovery.
Tax: no new rises – but no giveaways either
There were no changes to Corporation Tax or any additional tax increases for businesses, which will come as a relief to many. However, the main rate remains at 25% for companies with profits over £250,000, with no signs of that shifting any time soon.
In reaffirming her commitment to “economic stability,” the Chancellor made it clear that restraint will continue to be a key theme in fiscal policy – at least for now.
Making Tax Digital: major change coming in 2027
The government confirmed that Making Tax Digital for Income Tax will extend to individuals earning over £20,000 from self-employment or property from April 2027.
This will require affected taxpayers to submit quarterly digital updates and an annual final declaration, using HMRC-compliant software.
For those impacted, this represents a significant shift in how tax is reported and managed – and with the timeline now confirmed, it’s wise to start preparing early.
Business rates: reform on the agenda
A long-awaited review of the business rates system is now officially underway, with an interim report expected in summer 2025. Final policy decisions are likely to be announced in the Autumn Statement.
This could have particular relevance for businesses operating in bricks-and-mortar sectors such as retail, hospitality and manufacturing, where business rates can have a material impact on overheads.
R&D relief: increased scrutiny, possible thresholds
As part of a broader crackdown on error and fraud, the government is reviewing how it manages R&D tax relief.
HMRC is consulting on an expanded Advance Clearance regime, which may eventually become mandatory for new or irregular claimants. There is also discussion around introducing a minimum spend threshold, below which claims might be disallowed.
If implemented, these changes could reduce uncertainty for eligible businesses – but they may also limit access for smaller firms. Either way, claimants should expect a more rigorous approach from HMRC going forward.
Phoenixism: tighter rules under consideration
In response to concerns around “phoenixism” – the practice of winding up companies to avoid liabilities before restarting under a new name – the government is exploring options to tighten oversight.
This may include requiring upfront tax payments from certain businesses, aimed at protecting HMRC and creditors from financial loss. Further detail is expected later this year.
Employer NICs: no movement – yet
Despite calls from the business community to reduce employer National Insurance contributions, the Spring Statement made no changes.
However, this remains a live issue and could resurface in the Autumn Budget. Businesses should stay alert to developments in this space.
While the Spring Statement may not have delivered headline-grabbing announcements, its tone and content were deliberate. This was about regaining economic credibility, reinforcing stability, and setting the stage for sustainable growth.
For business owners, the takeaway is clear; stay informed, plan ahead, and prepare for a more digitised, compliant, and scrutinised environment – particularly when it comes to tax.
We have put together a useful summary you can download here. If you’re unsure how these changes could affect your business or would like to explore your options in light of the Statement, our team is here to help.