Spring Statement 2025: 10 Things Business Owners Need to Know
The Chancellor’s Spring Statement on 26 March 2025 introduced a number of policy changes that will directly impact business owners across the UK. While the government maintained its promise of “no major tax announcements,” the statement still outlined significant shifts in spending, national insurance, and tax administration that SMEs should prepare for now.
Here are the 10 most important takeaways for small and medium-sized business owners:
1. Employer NICs are rising in 2025
From 6 April 2025, employer National Insurance Contributions will increase from 13.8% to 15%, alongside a reduction in the Secondary Threshold from £9,100 to £5,000. This change will result in higher employment costs for many businesses, especially those with larger payrolls.
2. Employment Allowance Increased
To help soften the blow of the NIC rise, the Employment Allowance will double from £5,000 to £10,500, and the previous £100,000 employer NIC cap will be removed. This is positive news for smaller employers, who may now be able to offset the rise in contributions.
3. Self-Employed NICs: Class 4 Cut, Class 2 Adjustments
From April 2025, the Class 4 NICs rate for the self-employed will fall to 6% (down from 8%). While Class 2 NICs will still be required for voluntary contributions, access to state benefits is protected for those earning over £6,845 without the need to pay Class 2.
4. Making Tax Digital (MTD) for Income Tax Expands
The Spring Statement confirmed that MTD for Income Tax will apply to:
Income over £50,000 from April 2026
Income over £30,000 from April 2027
Income over £20,000 from April 2028
This means many more sole traders and landlords will need to switch to digital record-keeping and quarterly submissions. If you’re not already MTD-compliant, now is the time to prepare.
5. Capital Gains Tax: Rate Increases and Relief Reductions
For disposals made after 6 April 2025:
The Business Asset Disposal Relief rate will increase from 10% to 14%, and to 18% from 2026
CGT rates on basic rate taxpayers have already risen from 10% to 18%, and higher rates from 20% to 24%
Planning the timing of asset sales will be key for business owners in the coming years.
6. Inheritance Tax Changes Ahead
From April 2026, Agricultural and Business Property Relief will be capped at £1 million for full 100% relief. Anything above this will qualify for only 50% relief. Succession and estate planning should now be a priority for rural and family-run businesses.
7. VAT Threshold Maintained
Despite speculation, the VAT registration threshold will remain at £90,000, with a deregistration threshold of £88,000. While unchanged, many businesses may still be brought into scope due to inflation.
8. Full Expensing Confirmed
The government has maintained the 100% Full Expensing allowance for qualifying plant and machinery, giving businesses an incentive to invest in equipment, vehicles (not including cars), and other capital assets.
9. Abolition of the Furnished Holiday Letting Regime
From April 2025, the FHL regime will be abolished. Property owners will no longer be able to access specific tax advantages, including Business Asset Disposal Relief, rollover relief, or pension contribution enhancements.
10. A Push for Skills and Growth in Construction
The Chancellor pledged £625 million for construction skills development and £2 billion for social and affordable housing. This is a clear opportunity for construction firms, training providers, and developers in the sector to grow and upskill their workforce.
How Exchange Accountants Can Help
At Exchange Accountants, we understand that change brings uncertainty — but also opportunity. Whether you need to plan for NIC increases, ensure MTD compliance, or revisit your long-term tax strategy, our team is here to help you stay one step ahead.
Not sure how these changes affect you?
Contact us today and we’ll walk you through your options.
