UK Spring Statement 2025 - Top Tax Takeaways

The UK Spring Statement was delivered today by Chancellor Rachel Reeves.

As was widely predicted - and indeed definitively stated by the Chancellor - there were no substantive tax changes announced in the Spring Statement, in the time slot which not so long ago was the immoveable position for the actual Budget. This followed the vast changes made – or to a great extent announced in advance - in the last actual Budget on 30 October 2024. Some of these changes come into effect from the start of the new tax year, on 6 April 2025 and some are mentioned below.

The actual tax measures announced today

1. Anti-avoidance Consultation - The UK Government has published a consultation proposing various new measures allowing HMRC to close in on promoters of tax avoidance schemes and to tackle legal professionals designing or contributing to tax avoidance schemes. These measures include giving HMRC additional powers, introducing targeted obligations and stronger information powers, and increasing penalties and sanctions. The consultation also includes several proposals for the introduction of new criminal offences targeted at anti-avoidance measures.

2. R&D Consultation – following on from various scandals around R&D “consultancies” submitting spurious claims, and a consultation in 2024, a new consultation has been announced into the R&D advance assurance facility offered by HMRC. The consultation seeks views on a number of options, such as introducing a voluntary “paid for” assurance pathway, “pre-activity” assurances, mandatory advance assurance for certain areas with low compliance, as well potentially switching from a “Pay now, enquire later” system to an “ask first” one. The consultation is open until 26 May 2025.

3. PISCES share transactions - Guidance has been published on tax implications for companies and employees of transactions on PISCES, a new secondary securities trading platform, including the implications for EMI and CSOP tax advantaged share schemes. Draft legislation for stamp duty and SDRT exemptions on PISCES share transactions will be published for consultation.

4. Reform of behavioural penalties - The UK Government has published a consultation on reform of behavioural penalties (penalties for inaccuracies and failure to notify HMRC of tax due). The consultation considers two possible approaches: (1) reforming the existing framework (with a focus on simplifying how penalties are calculated and applied), and (2) an alternative model. The proposed alternative model has two elements: a misdeclaration / failure to notify penalty and a civil evasion penalty, for deliberate non-compliance.

5. Advance tax certainty for major projects - To give greater certainty on the tax treatment of major projects, the Government is consulting on a dedicated service, which would provide statutory certainty over how the tax rules will be applied to a project if it proceeds as planned.

6. Making tax digital threshold lowered to £20,000 from 2028 – from April 2028, making tax digital will be expanded to include taxpayers with income of more than £20,000 from either self employment or rental income.

Some of the more important changes announced in the last actual Budget coming into effect on 6 April

1. Non-doms - There are very substantial changes for that endangered species, non-doms. Indeed the very status of domicile is virtually abolished for tax purposes from 6 April, replaced with residence or long-term residence for different tax purposes. There are over 100 pages of new legislation to come into effect in the new tax year, derived from Finance Act 2025, which only received Royal Assent on 20 March 2025.

2. Employer National Insurance Contributions (NICs) - Employer NICs will increase from 6 April 2025 from 13.8% to 15%, with the thresholds at which employers start paying NICs reducing from £9,100 to £5,000. The Employment Allowance for small business will increase from £5,000 to £10,500, and the current £100,000 threshold is removed.

3. Carried Interest - The minimum rate of tax paid by fund managers on qualifying carried interest returns will increase from 1 April 2025 from 28% to 32%. This new rate will remain in effect for 12 months before carried interest is removed from the CGT regime and is treated as a trading profit – subject to the UK (or Scottish) rates of income tax and class 4 NICs. Under the new income tax rules, carried interest payments will benefit from a deemed reduction to 72.5%. Additional technical changes will be made to the surrounding tax rules for carried interest and the disguised investment management fee regime.

4. Business Asset Disposal Relief - From 6 April 2025, the effective rate of capital gains tax for qualifying gains where Business Asset Disposal Relief (BADR) is claimed will rise from 10% to 14% (with a further rise to 18% from 6 April 2026).

5. Making tax digital threshold lowered to £20,000 from 2028 – from April 2028, making tax digital will be expanded to include taxpayers with income of more than £20,000 from either self employment or rental income.

6. Inheritance tax - A further freezing of the nil-rate band continues into 2025-26, but many more substantial IHT changes on business and agricultural property and pensions are deferred until 2026 and 2027.