On 26 March 2025, Chancellor of the Exchequer Rachel Reeves delivered the UK’s Spring Statement addressing the nation’s economic challenges and outlining fiscal measures. It has prompted a mix of reactions – balancing concerns over economic growth with apprehensions about the social implications of welfare reforms.
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What many of us want to know is what implications are there to the tax we pay and what does the future hold financially for us and our families. After all, tax affects our wages, our businesses and our daily life, in significant ways.
EQ Accountants are tax specialists, accountants and business advisors. The experienced team of accountants help businesses around Scotland and the North of England plan for, and navigate, the tax landscape in their sectors – be that technology, leisure, healthcare or agriculture. In fact, EQ is the leading provider of accountancy, taxation, and succession planning in the rural sector.
What do we need to know about the Spring Statement?
Angela Haig is a Partner at EQ Accountants, and as a tax specialist, is well placed to assess the Spring Statement and the implications it holds. Following the Statement announcement, Angela shared her thoughts with us.
“In Rachel Reeves’ defence, an unstable world, uncertain trading conditions and possible escalation of war in Ukraine all caused problems for our Chancellor’s Spring Statement.
As predicted, it did not include any tax rises – so how is the government going to pay for the increased spending promised, in particular in relation to defence?
One area it will come from is the reduction in spend on the welfare system. Encouraging people currently claiming benefits into work is a worthy goal. However, employers are now struggling to meet the additional costs of the National Minimum Wage and Employers National Insurance announced last Autumn and are more likely to cut back on recruitment.
Tackling fraud in the welfare system by recruiting additional staff is welcome if the savings outweigh the cost.
Tackling tax avoidance
It is hoped that an extra £1 billion of revenue will be generated from further measures to tackle tax avoidance with several new consultation documents released including making better use of third-party data, reforming behavioural penalties, and measures to prevent the promotion of tax avoidance.
However, this is a drop in the ocean when compared with the level of unpaid tax liabilities. The admission that the tax debt at the end of December 2024 was £44 billion is staggering, and quite rightly the government needs to modernise the system to collect this debt. An increase in late payment penalties from April 2025 may assist.
Making tax digital for income tax is proceeding from April 2026, forcing small businesses and landlords to make quarterly submissions to HMRC. The income thresholds previously announced are £50,000 from April 2026 and £30,000 from April 2027.
Increased administrative burden for small businesses
The threshold from April 2028 will be £20,000. This brings most non-VAT registered businesses and landlords additional costs and administrative burdens of digital record keeping and software requirements to comply, for little benefit to them and no additional revenue to HMRC. It’s a contradiction to the ‘Plan for Change’ promising to cut compliance costs to business by 25%.
Growth of the economy should generate higher tax revenues. There is a promise to ensure many small businesses will be able to benefit from new defence contracts and this would boost work in the local economy. Planning reforms, if replicated in Scotland, will also boost the construction industry bringing much needed housing to the area.
Making the public sector more productive should be a priority. Proposed reforms promise value for money for taxpayers and a transformation fund will help fund digital technology. It is interesting that there is a commitment that 1 in 10 civil servants will be digital professionals by 2030.”
The right advice can help you navigate the tax landscape and plan for the future. EQ Accountants have offices all over Scotland and can support you with expert business and tax advice, an understanding of your sector – and local knowledge.
Conversation