Originally supposed to be a short statement to accompany the latest snapshot of the future of the UK economy, this week’s Spring Forecast could become much more significant amid continued uncertainty.
But what could that mean for local businesses and taxpayers?
As part of its efforts to create certainty for both the markets and individual taxpayers, when the Labour Government came into power it committed to having one single fiscal event each year in which to announce tax and spending changes, that event being the Autumn Budget.
However, the economy has remained stubbornly sluggish since Rachel Reeves’ first Budget in October, with growth forecasts being revised downwards and the proposed increase in employer’s national insurance contributions (NICs) from 13.8% to 15%, on top of the increases in the minimum wage, attracting particular criticism.
The Government has also faced a backlash from its own backbenchers regarding decisions to cut the foreign aid budget (in order to increase defence spending) and to reduce the welfare budget by £5 billion by 2030.
Add to this the threat of significant tariffs being imposed on exports to the USA, it’s possible that what should merely be a statement to accompany the publication of a Spring Forecast by the Office for Budget Responsibility could become something significantly more than that.
The reaction to the proposed welfare reforms has included renewed calls for a ‘wealth tax’ on high-value estates. However, given that those reforms have only just been recently announced, it is unlikely that the Government will have given much consideration to such a measure.
Rather than changing tax rates, there has been some speculation that the freeze on tax allowances and bands (which is in place until 2028) could be extended further, for example for another two years until 2030.
Given that the increase in Employers’ NIC was the major part of the Government’s attempt to fill the ‘black hole’ (as they would describe it) left by the previous Conservative administration, it is difficult to see this position being reversed.
Having said that, there have been representations by various industries (notably in the care sector) for exemptions from these increases and this might give the Government some pause for thought in terms of addressing specific concerns.
One of the major changes announced in the Autumn Budget which will affect Owner-Managed Businesses is the reduction in inheritance tax reliefs (i.e. Business Property Relief and Agricultural Property Relief).
Both reliefs are being reduced so that, where an asset might qualify for 100% relief today, once the changes are enacted only the first £1m will qualify for 100% relief, with the remainder attracting 50% relief. However, these changes will only be enacted with effect from 5 April 2026, and indeed are still under consultation.
Therefore, although there has been significant kickback against the proposed changes to APR in particular, one would not expect the Spring Statement to address these matters in detail. If (and it’s a big ‘If’) there were to be any significant changes to this policy, it is more likely that they would be included in the next Autumn Budget.
As the changes will be introduced only from 6 April 2026, it also highlights the opportunity for owner-managers to review their affairs now, prior to the new rules becoming effective.
Most of the other changes announced in the Autumn Budget will come into force on 6 April 2025, including the increased CGT rate applicable to assets qualifying for Business Asset Disposal Relief (up from 10% to 14%), the replacement of the ‘non-dom’ rules with a new regime for long-term residents and the aforementioned increase to employers NICs – it is virtually inconceivable that these will be changed by the Spring Statement.
However, if the economy continues to fight off all efforts to generate meaningful growth over the next few months, further significant measures in the Autumn Budget will become almost inevitable.