The new Labour government’s first budget back in October 2024 saw a lot of big changes introduced, with individuals and small businesses alike being affected. With just over a week to go until the Spring Statement, speculation about what will be outlined is well and truly underway.  

Unlike the Autumn Budget, next week’s Statement should pose as an update on announcements already made and economic developments to come. It’s unlikely there will be any new policy announcements, and we should instead get further clarity and details on previous decisions. That being said, rumours about further potential tax increases mean that what was initially billed as an update on public finances may yet turn out to be a mini budget of sorts. 

Here at Caroola, we thought it timely to look ahead to what we can expect to be addressed by Chancellor Rachel Reeves on Wednesday 26^th March 2025. The Office for Budget Responsibility (OBR) will also publish its outlook on public finances on the same day. 

Autumn Budget 2024 Recap 

For those who want a quick refresher on legislation changes made in the autumn budget, we’ve highlighted some key points below: 

• Employer’s National Insurance: The government announced the lowering of the Employer’s National Insurance (ER NI) threshold from £9,100 to £5,000 from April 2025. 

• National Minimum Wage: Will increase to £12.21 (6.7% up) from April 2025. Confirmation of an intention to move towards a single wage rate.   

• Capital Gains Tax: Capital Gains Tax (CGT) increased from 30^th October 2024 with the lower rate of 10% increasing to 18%, and the higher from 20% to 24%.  

• Business Asset Disposal Relief: The £1million lifetime limit remains, however, it will face an increase in rates from 10% to 14% from April 2025 and then again to 18% from April 2026. 

• Inheritance Tax: Thresholds frozen until 2030. 

• Property Investments: Those who have property investments will find increases in the Higher Rates for Additional Dwellings of Stamp Duty Land Tax from 3% to 5% as of October 2024. 

For a more in-depth breakdown, head over to our Budget Day summary. 

Spring Statement 2025  

There have already been a number of announcements in the lead-up to the Spring Statement which we can expect to hear more about on the day. These include: 

Trading Allowance Thresholds 

By the end of 2029, the threshold for filing a self-assessment tax return (SATR) for trading income will rise from £1,000 to £3,000. For those who are self-employed and with smaller incomes, this will mean a big change to their HMRC tax reporting requirements. You can read more about the changing trading allowance threshold here.  

Company Threshold Sizes 

The government has now confirmed that significant changes will be made to two out of three threshold classifications for a ‘small company’. The thresholds for Annual Turnover and Balance Sheet Total will both be increasing, while Number of Employees remains the same.  

What does this mean? Many medium and large companies may now find themselves classed as a ‘small company’ instead. This shift will have a knock-on effect on IR35 (also known as off-payroll working rules) as the responsibility for determining the correct employment status will once again shift back to the contractor. 

To read more about changing company threshold sizes and the impact on IR35, read our recent blog.  

Speculation 

As to new topics we might hear about, there has been talk about the following areas being targetted: 

• Income Tax (IT) thresholds: thresholds for income tax mark the limit that a person can earn before moving into the next tax band. These were frozen by the previous government in 2021 and there are rumours of this freeze continuing beyond 2028. A continued freeze will prevent an increase that is in line with inflation. 

• Inheritance Tax (IHT) & gifting rules: under current rules, as long as a person lives seven years after gifts are made, they are free of IHT. While IHT thresholds are frozen until 2030, rules around gifting could change, for example extending the seven-year time period. 

• Individual Savings Account (ISA) changes: from adjustments made to personal savings allowance to reducing the tax-free allowance on cash ISAs, there are a lot of potential changes that could be made in this area. 

It’s important to note that when it comes to IT, IHT, and ISA changes, these are all only speculations. We will have to wait until the Statement to find out what’s in store. 

Preparing for Upcoming Changes 

Until we have concrete details come March 26^th, there isn’t much to be done in the way of preparing for upcoming changes. We would always advise making sure your accounts are up to date and suggest that you revisit any short-term or long-term strategies you have in place so that you’re in a good position to react quickly to anything that may come up affecting those. 

Final Thoughts 

We’ll be keeping a close eye on changes made during the Spring Statement that affect small businesses and contractors, so make sure you check back in on our blog page after March 26^th for our round-up of the all-important announcements.  

In the meantime, feel free to get in touch with one of our team if you have any questions or concerns regarding something mentioned in this blog.