The latest Spring Statement didn’t bring any major surprises when it comes to tax. Many had hoped for relief on national insurance or inheritance tax, but with the government needing to raise an extra £40 billion, those hopes were dashed. Instead, the focus remains on previously announced changes and new efforts to close the “tax gap”—the difference between what should be collected and what actually is.
Key Tax Changes to Know
If you’re a taxpayer, business owner, or investor, here’s what you need to keep an eye on:
- Employer’s National Insurance: Rates are increasing from 13.8% to 15%, and the threshold is dropping from £9,100 to £5,000. This means businesses will pay more in contributions.
- Inheritance Tax (IHT): Business and Agricultural Property Relief is being cut in half, meaning more assets over £1 million will now be taxed at 20%. Plus, IHT will soon apply to undrawn pensions.
- Capital Gains Tax (CGT): Rates are increasing to 18%/24%, and the Business Asset Disposal Relief rate will rise from 10% to 14% in April 2025, then 18% the following year.
Government Cracks Down on Tax Evasion
To boost tax revenue, the government is taking serious steps:
- More HMRC Staff: £100 million will be spent hiring 500 new compliance officers.
- Fraud Investigations: More criminal cases will be pursued to catch tax dodgers.
- Whistleblower Rewards: A new scheme will pay informants a percentage of any tax recovered.
- Targeting Avoidance Schemes: Authorities will tighten the rules around tax loopholes and dishonest advisers.
Technology & Debt Collection
The government is also looking at technology to improve tax collection:
- Making Tax Digital (MTD): From April 2028, sole traders and landlords earning over £20,000 must use MTD for Self Assessment.
- Stronger Debt Collection: Late payment penalties will increase, starting at 3% for taxes overdue by 15 days and rising to 10% per year for long-overdue payments.
- Private Debt Collectors: £87 million will be spent working with private firms to recover unpaid taxes.
- Direct Recovery: Authorities will take money directly from taxpayers’ accounts if they can pay but refuse to.
Support for Businesses & R&D
There are also updates on business taxes and research funding:
- Corporation Tax Cap: The rate will stay at 25%, with relief for small businesses remaining in place.
- Investment Incentives: The government will maintain full expensing, R&D relief, and the Patent Box scheme.
- R&D Tax Credit Reform: A consultation is underway to simplify the application process for research tax credits.
What This Means for You
While there were no big surprises, these changes could mean:
- Higher costs for businesses due to National Insurance hikes.
- More inheritance tax to pay if you have valuable assets.
- Stricter penalties if you owe tax or use questionable schemes.
- More digital tax processes, especially for self-employed workers and landlords.
The government’s priority is clear: closing the tax gap and increasing revenue. If you’re affected by these changes, now is the time to plan ahead and seek professional advice!
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