Spring Statement 2025 Winners & Losers

Labour’s commitment to restore stability meant that the writing was on the wall for this Spring Statement – a Statement which is unlikely to put a spring in anyone’s step. Following Chancellor Rachel Reeves’ bombshell Budget in October, this was a more sedate affair.

Turbulent economic forces since the Autumn have meant that the announcements today were expected to comprise of a series of stringent spending cuts. However, we instead heard a series of statistical forecasts centred on restoring growth and curtailing Government borrowing under Labour’s self-imposed ‘stability rule’ to match Government spending with tax intakes.

Winners

HM Revenue & Customs

According to the Chancellor HMRC can expect an increase in their coffers as it was announced there would be increased investment in their technology, with a target of a 20% increase in tax fraud convictions. It is claimed that the total revenue raised from a clampdown on reducing tax evasion will increase to £7.5 billion.

MOD and STEM

Reeves also announced an additional £2.2 billion to go to the Ministry of Defence in the next financial year as part of a wholescale expansion in defence spending to provide both national and economic security, with additional funds set aside for innovation. For those in STEM, there will be a sharp uptick in demand for highly skilled jobs in the defence technology and engineering sectors.

Public services

Aside from the expansion of the defence budget, the Chancellor also announced a new ‘transformation fund’ for the reform of public services. Again, the technology and consulting industries, and their employees, will be placed under high demand for Government contracts as the fund is to be used to invest in artificial intelligence tools to streamline public services and ramp up their efficiency. First in line is the Ministry of Justice for its probation services, and the foster care scheme.

Some benefit claimants

Unexpectedly, the Chancellor announced that the Universal Credit (UC) standard allowance will actually increase from £92 per week in 2025/26 to £106 per week by 2029/30.

Cash ISA investors

Those who were concerned about the rumoured restrictions on the amount which can be contributed to a cash ISA will be relieved to know that no changes were announced today, and the annual investment limit remains at £20,000 per year.

UK arrivers

While not specifically mentioned by the Chancellor today, from 6 April 2025, UK expats living abroad and returning to the UK, may be able to benefit from the new ‘Foreign Income and Gains’ regime and enjoy foreign income and gains tax-free for the first four years of UK residence and foreign assets being outside the scope of Inheritance Tax. This will be subject to having been non-UK resident for a period of at least 10 years prior to returning.

Everyone…

(apparently) – And of course the Chancellor advised that everyone will be £500 per year better off… although we are not sure on the maths for this.

Losers

Some benefit claimants

Reform of the welfare system means some claimants of health-related welfare benefits, including recipients of Universal Credit (UC) and Personal Independence Payments (PIP) will lose benefits. Reeves confirmed that the forecast is that they will cut Government spending by £4.8 billion. The changes are proposed to take effect from November 2026 and will be applied to new claimants and those re-applying.

The health element of UC will be cut by 50% from April 2026 (for new claimants) and then frozen at £50 per week until 2029/30. On an initial impact assessment, it is estimated that 3.2 million families will be set to lose £1,720 per year compared to inflation, from 2029/30 as a result of the measures.

Taxpayers in general

With the freezes on allowances announced in October and no comment today, it should not be forgotten that with Personal Allowances, Income Tax and NIC thresholds remaining frozen until at least 2028/29, fiscal drag continues to affect most taxpayers. With inflation, this is one of the most effective ‘stealth taxes’ on taxpayers, as many fall into the tax system and creep up into higher tax bands. This will continue to be an important revenue stream for the Government who can rely on this to top-up the national purse, without overt tax rises.

Late payers

There will be increases in late payment penalties for VAT from April 2025 and Self-Assessment filers joining ‘Making Tax Digital’ from April 2026. Where tax is not paid within 15 days of the payment deadline, HMRC will charge an initial late payment penalty of 3% of the tax due, with a further 3% due after 30 days and up to 10% per annum for late payments after that.

Non-doms

For any non-UK domiciled individuals hoping for a delay in the changes to the tax system due to take effect from the 6 April, no mention was made here, and so the true impact of this will remain to be seen.

Property purchasers

With many already struggling to get on the property ladder, from 1 April 2025, rates of Stamp Duty Land Tax (SDLT) will increase and relief for first time buyers will be cut. Coupled with rising house prices, this additional cost will likely be a set-back to many buying a home despite the Chancellor’s commitment to building more houses.

Employers

As this was not a fiscal event, employers are still going to have to find the extra funds for the employer NIC increase of 1.2%. If businesses bore the brunt of the Autumn Statement, they have certainly not been offered a lifeline today. Undoubtedly, as businesses’ labour expenses rise, we will see an uptick in inflation with prices rising to meet these costs. We can also expect a stagnation in wages as reluctant employers think twice about rewarding staff in exchange for a hefty National Insurance bill down the line.

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