Spring Statement 2025: Key Points & What It Means for You | Atek Accounting

What Was Announced in the Spring Statement 2025?

Chancellor of the Exchequer Rachel Reeves delivered the Spring Statement on Wednesday, 26 March 2025, focusing on economic stability and reaffirming her commitment to a single major fiscal event each year.

She stated, “To provide security for working people and to deliver a decade of national renewal, we must make long-term decisions for enduring economic stability.”

While there were no unexpected tax changes, key shifts in government spending and policy will have a major impact on businesses, individuals, and the wider economy.

From defence investments to welfare reforms and tax policy updates, here’s what you need to know.

Key Points from the Spring Statement 2025

The UK’s Spring Statement introduced several significant spending adjustments aimed at addressing the nation’s economic challenges. Key measures include:

  • Welfare reforms aimed at cutting costs, with stricter rules for some benefits.

  • 10,000 civil service job cuts to reduce spending and put more money into frontline services.

  • More money for defence, with spending set to rise to 2.5% of GDP by 2027, partly funded by cuts to overseas aid.

  • Making Tax Digital (MTD) updates, though no big changes were announced.

  • Tax bands staying frozen, but changes to National Insurance will have an impact on businesses and workers.

You can find the official 2025 GOV.UK Spring Statement here.

Want to know more about how these changes might affect you or your business? Keep reading for a detailed breakdown.

Defence Spending: A National Security Focus

  • Additional £2.2 billion for the Ministry of Defence next year.

  • Targeting 2.5% of GDP on defence by 2027, with aspirations to reach 3% in the next Parliament.

  • Overseas aid reductions to fund these increases.

Welfare Reforms: What’s Changing for Claimants?

  • Freezing the Universal Credit health element for existing claimants until 2029/30.

  • Reducing Universal Credit health payments for new claimants to £50 per week from 2026/27.

  • Increasing the Universal Credit standard allowance above inflation from April 2026 (CPI + 5% by 2029). A projected rise from £92 in 2025/26 to £106 in 2029/30.

  • Stricter eligibility checks for new Universal Credit claimants.

  • £3.25 billion Transformation Fund to streamline public services, including integrating NHS England into the Department of Health and Social Care.

Investment in Growth: Housing & Skills

  • £2 billion allocated for social and affordable housing in 2026/27, targeting the construction of 1.5 million homes in England.

  • £625 million investment in construction skills, aiming to train 60,000 new skilled workers by 2030.

Income Tax Bands & Rates (Frozen Until April 2028)

Band Taxable income Tax rate
Personal Allowance Up to £12,570 0%
Basic rate £12,571 to £50,270 20%
Higher rate £50,271 to £125,140 40%
Additional rate over £125,140 45%

What About Scottish and Welsh Residents?

  • Scotland: Six income tax bands (19% to 48%).

  • Wales: Rates aligned with England & Northern Ireland.

Personal Allowances (Frozen Until 2028)

  • £12,570 personal allowance.

  • Phased reduction for earnings above £100,000.

  • Increases to the married couple’s and blind person’s allowances in 2025/26.

Pension Taxation Updates

  • Annual Allowance (AA): £60,000 (tapered for earnings above £260,000).

  • Lump Sum Allowance: £268,275.

  • Lump Sum & Death Benefit Allowance: £1,073,100.

Non-UK Domiciled Taxation: Major Changes from April 2025

  • Transition from domicile-based to residence-based taxation.

  • Four-year 100% relief on foreign income for new UK residents.

  • No more tax protection for foreign income in settlor-interested trusts.

  • New Inheritance Tax system based on residence, not domicile.

Employer NICs

  • Employer NICs rise from 13.8% to 15% from 6 April 2025.

  • Employee NIC rate remains at 8%.

  • Secondary Threshold for employer NICs falls from £9,100 to £5,000.

  • Employment Allowance increases from £5,000 to £10,500.

For the Self-Employed

  • Class 4 NICs: 6% and 2%.

  • Class 2 NICs: £3.50 per week.

  • Class 3 NICs: £17.75 per week.

National Minimum & Living Wage: (Rates From 1 April 2025)

  • 21 and over (National Living Wage): £12.21 per hour, an increase of £0.77 (6.7%).

  • 18 to 20: £10.00 per hour, up by £1.40 (16.3%).

  • 16 to 17 & Apprentices: £7.55 per hour, an increase of £1.15 (18.0%).

Company Car & Van Tax Increases

  • Zero-emission car tax rate rises to 3%.

  • Other company car tax rates up by 1%.

  • Car fuel benefit charge: £28,200.

  • Van benefit charge: £4,020; van fuel charge: £769.

Double Cab Pick-Up Vehicles (DCPUs) – New Tax Rules

  • From April 2025, DCPUs will be taxed as cars rather than vans.

  • This impacts capital allowances & business deductions.

  • Transitional arrangements apply until 2029.

  • Further details expected on residential property disposals.

  • Updates likely on carried interest taxation.

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Prepare for Financial Adjustments in 2025-26

While tax rates remain stable, the 2025 Spring Statement introduces significant changes in National Insurance, welfare policies, and employer costs.

These shifts could impact your business operations and financial planning. It’s crucial to stay ahead of the curve and plan accordingly.

Here’s how Atek can help:

✔️ Employers: With the increase in NICs and higher wage costs, Atek can assist you in reviewing your budgets and payroll strategies.

✔️ Self-Employed: Atek can guide you through the changes in National Insurance Contributions, helping you understand how the changes may impact your income and advising on the best tax strategies.

✔️ Taxpayers: Domicile changes may impact higher rate tax planning, and stricter welfare eligibility rules could affect claimants. Atek can help you understand and ensure you’re making the most of your financial situation.

Need expert guidance? Atek is here to help you navigate these changes and plan ahead. Get in touch today!

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