Key takeaways
- Employer NICs rose from 13.8% to 15% from 6 April 2025, with the secondary threshold dropping from £9,100 to £5,000, significantly increasing hiring costs for small businesses.
- The Employment Allowance doubled from £5,000 to £10,500, helping eligible employers offset a portion of the increased National Insurance burden from April 2025.
- Business Asset Disposal Relief increased from 10% to 14% from April 2025 and is scheduled to rise further to 18% from April 2026, affecting business owners planning a sale.
- Making Tax Digital for Income Tax launches from April 2026 for self-employed individuals and landlords earning over £50,000, with the £30,000 threshold following in April 2027.
- The Spring Statement 2025 announced no new tax policies. Businesses should focus on adapting to Autumn Budget 2024 measures and watch the next Autumn Budget for further changes.
Chancellor Rachel Reeves will deliver the government's Spring Forecast on March 26, 2025, previously known as the Spring Statement. Unlike previous years, this will not be a full fiscal event. Instead, the new government will focus major tax and spending decisions for the Autumn Budget.
The Treasury says there won’t be any policy changes, but some experts think the Chancellor might use this chance to revise certain highly criticised tax measures from the Autumn Budget 2024. With a focus on economic growth and job creation, could there be changes to taxes or new benefits for businesses and contractors?
What should small business owners and contractors expect from the Spring Statement 2025? What changes are already planned, and what new measures might the government introduce?
Here’s what you need to know.
Spring Statement 2025 Predictions
1. Employer’s National Insurance Contributions (NICs)
The upcoming rise in employer NICs from 6 April 2025 is a bigger concern for businesses, as it will increase hiring costs and put more financial pressure on employers. The last 15% hike was already tough on businesses, particularly small employers and contractors, and thus, they are asking the government to reconsider it or introduce relief measures.
While reversing the policy at this stage almost seems impossible, there is a rumour that the government could offer relief through:
- A higher Employment Allowance to ease the burden on small businesses
- An increased threshold before employer NICs become payable
- NIC relief for charities which are struggling with funding challenges
Many argue that this is a tax on jobs, making hiring and retaining staff harder. As the Spring Statement approaches, businesses will keep their eye on the government to see if any adjustments or reliefs are announced.
Jonathan Cooper, director and founder of The Director’s Helpline and The Director’s Choice says, ““The Chancellor has the opportunity later this month to make a real difference to business owners – to clarify measures outlined in the Budget and to refrain from any further tax rises. Business owners, particularly SMEs, need a lifeline. The £25 billion annual increase in employers’ National Insurance Contributions (NIC) has been incredibly damaging.”
2. Umbrella Company Reform
The government is finally taking steps to fix issues in the umbrella company sector. However, the Autumn Budget 2024 announcement caught many compliant firms off guard, raising concerns about how HMRC will tackle problems without causing new ones.
A possible solution comes from recent updates to the Employment Rights Bill by the Department for Business and Trade (DBT). They propose a new regulator, the Fair Work Agency (FWA), which may help create a fairer system without interrupting umbrella companies that follow the rules.
From April 2026, agencies will have to handle PAYE payments for workers using umbrella companies. If no agency is involved, this responsibility will shift to the end client.
The changes still have time to take effect, and many industry experts are urging the Chancellor to reconsider these plans to protect compliant umbrella companies while cracking down on bad actors. The government is expected to work closely with stakeholders throughout the year to refine these proposals.
3. Action Against Payroll Fraud
Bringing umbrella companies under the Fair Work Agency is a positive step, but only rules cannot solve the problem. If the government wants to take strict steps against tax avoidance and non-compliance, it must provide proper funding for both the FWA and HMRC compliance teams.
Businesses that abide by the law should not take all the burden while illegal operators go unnoticed. Enforcement needs to go directly against bad practices and not pass the buck to recruiters. Without enforcement, these reforms will never meet their objectives.
4. Inheritance Tax (IHT)
Farmers have been voicing their concerns over the new Inheritance Tax (IHT) rules, but of greater concern are the implications on businesses and pensions. Businesses above the £1 million threshold will be charged 20% IHT from April 2026, and pensions will also fall under this tax starting in April 2027.
The government has launched a consultation on pension IHT, so we shouldn't expect any immediate changes in that area. On the other hand, ministers are holding their ground on the IHT for businesses and farmers, although they might reconsider if the £1 million threshold is too low. The government plans to hold a technical consultation on agricultural and business relief in early 2025, but it remains unclear whether the consultation will offer meaningful updates. Businesses and individuals must wait in the meantime.
Jason Hollands, managing director at Evelyn Partners said, “"Under the auspices of 'simplifying' this, we could see fewer options for enabling people to pass wealth on during their lives to mitigate IHT."
5. Carried Interest Tax Reform
The changes to carried interest taxation, announced in the Autumn Budget, were widely expected, as they were part of Labour’s manifesto. The most immediate change is a rise in capital gains tax on carried interest, increasing from 28% to 32% from 6 April 2025. However, a bigger shift is coming in April 2026, when carried interest will move entirely into the income tax system, regardless of how the returns are classified.
A technical consultation on these reforms ended in January 2025, and draft legislation is now awaited. The recent consultation also examined whether extra conditions should apply for carried interest to qualify under the new system. While existing fund structures will not be exempt from the new rules, transitional measures may be introduced to ease the shift.
6. Making Tax Digital
The government confirmed in the autumn budget its plan to roll out Making Tax Digital for Income Tax from April 2026. As this is a significant change for those affected, more guidance is expected in 2025.
At the moment, agents cannot yet sign up, but a registration system is expected to open well before April 2026, giving businesses enough time to get ready.
7. End of Non-Dom Status
Once the Finance Bill 2024-25 becomes law, the full details of the new non-dom rules taking effect from 6 April 2025 will be clear. While the Chancellor hinted at possible softening of the rules during Davos, the amendments made during the Committee Stage in January were less significant than expected. This leaves room for further adjustments before the final version is confirmed.
8. Cash ISAs
There has been speculation regarding future changes to Cash ISAs, with talk of cutting the tax-free allowance or persuading people to invest more in stocks and shares.
Although the government has ruled out any short-term changes, Treasury sources have suggested future reforms are a possibility. These could focus on redirecting savings into investments that support the UK economy rather than keeping funds in cash accounts.
Currently, individuals can save up to £20,000 in a Cash ISA, Stocks and Shares ISA, or a mix of both, but this structure might be changed in a future Budget.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: "The current uncertainty sown by rumours around the future of cash ISAs is unhelpful for savers.
"Chopping and changing products like ISAs is more likely to put people off saving and investing for the long term."
9. Capital Gains Tax
Capital Gains Tax (CGT) may be reviewed in the upcoming Spring Statement. The Business Asset Disposal Relief (BADR) rate is set to rise from 10% to 14% on 6 April 2025, with a further increase to 18% in April 2026.
These changes may impact business owners and investors, particularly those who intend to sell or restructure their businesses. There are also chances that the suggested increase in BADR rates may be reconsidered.
10. Fiscal Drag
The upcoming spring statement is set to maintain fiscal drag at the same level. This happens when tax thresholds remain frozen, and thus more individuals pay more taxes as their earnings increase, even without new tax policies. Most taxpayers experience it, as it progressively increases the overall tax rate.
Let’s review Potential Tax Changes in the Upcoming Budget:
The Spring Forecast 2025 introduces significant tax changes affecting small businesses and contractors. With increases in employer National Insurance, Capital Gains Tax changes, and potential reforms to ISAs and inheritance tax, companies need to be aware and plan accordingly.
For contractors and small businesses, the key right now is to adjust to these changes and take full advantage of the allowances and reliefs that are out there. As we anticipate more details in the months ahead, keeping yourself informed will be crucial for effective financial planning.
As per Mike Barrow, a financial planning consultant at Wealth Wizards, “people have time to react to any changes and make informed decisions that serve their best interests,”.
If you'd like to learn how the Spring Statement 2025 could impact your business and discuss the best approach to handle future tax changes, book a free consultation with our small business accountant now.
