What Should Accountants Expect from the Spring Forecast on 26 March 2025?

Chancellor Rachel Reeves is set to deliver the Spring Forecast on 26 March 2025, providing an update on the UK’s economic outlook and fiscal strategy. The Chancellor has previously ruled out further tax increases at this fiscal event but economic and worldwide factors are sending our government down a road different to the one originally intended.

The Chancellor’s desire to operate within her self-imposed fiscal rules means we are likely to see an emphasis on spending cuts, along with new information about the tax roadmap for the duration of this parliament.

Accountants in practice need to be prepared for potential shifts that impact tax planning, tax compliance, and client advisory work.

If you would like to be first out of the blocks in advising your clients on the Spring Forecast, why not order a branded Spring Statement with our PDF analysis?

Why is there a Spring forecast?

The Chancellor, Rachel Reeves, will present her Spring Forecast on 26 March 2025. The Office for Budget Responsibility (OBR) has been commissioned to produce an Economic and Fiscal Forecast which will be published at the same time.

HM Treasury has confirmed that the Chancellor remains committed to one major fiscal event a year to give families and businesses stability and certainty on upcoming tax and spending changes and, in turn, to support the government’s growth mission.

Will Tax Simplification Be a Key Focus?

Autumn Budget 2024 promised that “the government will announce a package of measures to simplify tax administration and improve the customer experience in spring 2025, with a focus on reducing burdens on small businesses”.

More can be expected in this regard on 26 March, especially given the recent National Audit Office report on the administrative cost of the tax system. While looking at value for money in government spending, ensuring returns are maximised from investment in HMRC is likely to be key.

Accountants should watch for announcements on simplification, automation, upfront compliance activity and better working between HMRC and tax intermediaries. In particular, a Digital Transformation Roadmap is due to be published this spring.

Are Further Tax Rises on the Horizon?

The government has committed to not increase taxes on working people, so we are not expecting to see increases to the basic, higher or additional rates of income tax, National Insurance contributions (NICs) or VAT.

In the Autumn Budget 2024, the government pledged not to extend the freeze to income tax and NIC thresholds beyond April 2028 and said that, from that point, they will again be uprated in line with inflation; bringing an end to the fiscal drag that pushes more taxpayers into higher rates of tax as earnings rise while thresholds and/or tax bandings do not.

A question going into the 2025 Spring Forecast is whether this is a promise that the Chancellor can still afford to keep. It is possible that an announcement will be made to keep the income tax and NIC thresholds at their current levels until April 2030, mirroring the long-term freeze already announced for key inheritance tax thresholds.

What’s Next for Inheritance Tax Reforms?

At Autumn Budget 2024, the government announced several reforms to agricultural property relief and business property relief from Inheritance Tax. In particular, from April 2026:

• a new £1 million allowance will apply to the combined value of property that qualifies for 100% business property relief or 100% agricultural property relief, or both. After the £1 million allowance has been exhausted, relief will apply at a lower rate of 50% to the combined value of qualifying agricultural and business property
• the rate of business property relief available will be reduced from 100% to 50% in all circumstances for shares admitted to trading on a recognised stock exchange which are not ‘listed’.

We are now midway through a technical consultation that seeks views on aspects of the application of the £1 million allowance for property settled into trust qualifying for 100% agricultural property relief or business property relief.

With a backdrop of much concern and many meeting with the business and farming communities, it is possible that more information will be shared during the Spring Forecast although any radical reform or step back on the plans seems unlikely.

Additionally, it is expected that unused pension funds and death benefits will be included in inheritance tax estates from April 2027. Concerns have already been voiced about the interaction between the new application of inheritance tax (subject to estate values) and the existing rules that may apply income tax charges on beneficiaries of pension savings if the pension holder dies on or after age 75. The Spring Forecast may bring news of revised models or further consultations.

These inheritance tax reforms could significantly alter estate planning strategies, making it essential for accountants to stay ahead of any legislative developments.

In short, it is unlikely that we will see a U-turn or an extension to this April 2026 mandatory compliance change for employers. The move from post year-end P11Ds to in-year RTI reporting for most benefits-in-kind provided to employees is going to be a fundamental change for employers and their agents to get to grips with.

While we may not see technical change, we are still waiting on crucial detail to fully understand how the regime will work from April 2026, so it is possible that more information will be published alongside the Spring Forecast.

What about Making Tax Digital for Income Tax?

Similarly, we are highly unlikely to see any significant technical change to the upcoming April 2026 requirement for designated self-employed individuals and landlords to use compatible software to file their trading and/or property income summaries quarterly.

News in this area is now coming thick and fast, so accountants should make sure that they are staying abreast of the latest positions and preparing their practice and clients for this fundamental self-assessment reform.

Will Umbrella Company Regulations Change?

Another change earmarked for April 2026 relates to making recruitment agencies (or end client businesses) responsible for accounting for PAYE on payments made to workers that are supplied via umbrella companies. Following the announcement made at Autumn Budget 2024, there may be more information on the journey ahead in the Spring Forecast.

Accountants should be prepared to guide businesses through these regulatory shifts.

Are VAT and ISA Reforms on the Table?

There is growing speculation that VAT exemptions could be removed on a wider range of services, similar to the changes already seen for private schools. Such measures would effectively increase the cost to consumer where they are choosing to acquire a paid for or private version of a service that is exempt from VAT when a state-provided entitlement is available.

Individual Savings Accounts (ISAs) may also face changes, with reports suggesting a possible reduction in the cash ISA allowance from £20,000 to £4,000 to encourage investment through stocks and shares ISAs.

These potential reforms could have significant financial planning implications for private clients.

How Should Accountants Prepare for These Changes?

While not all policy announcements will be implemented immediately, accountants should proactively assess how potential tax changes could affect clients. Key actions include:

• Monitoring inheritance tax reforms and preparing for possible changes in APR and BPR.
• Encouraging clients to bring planned capital disposal discussions to the table early, enabling optimum planning opportunity as capital gains tax (CGT) rates change, including the rates for Business Asset Disposal Relief (BADR).
• Reviewing personal tax planning strategies in light of potential income tax freezes.
• Advising businesses on evolving payroll, self-assessment (MTD), and other compliance obligations.
• Keeping track of other factors relevant to business advice, including proposals relating to business rates or enhanced tax reliefs such as Research & Development reliefs.

The Spring Forecast will set the tone for the government’s fiscal policy ahead of the next Budget, and accountants must remain informed to provide timely and strategic advice to their clients.

Can 20:20 Innovation support firms on the Spring forecast and beyond?

Speak to our friendly customer account managers to find out the best way to keep your team technically up to date, utilising resources written by our 20:20 Innovation experts and continuing to proactively advise your clients on what they need to know; maximising value and profits for your firm at every turn.