“Spring Statement 2025: Tax Reforms, Economic Challenges, and the Path Ahead” by Emma Queen

April 1, 2025

During the 2025 Spring Statement, Chancellor Rachel Reeves outlined several tax related measures but thankfully, it was a much less dramatic speech than the one on 30th October 2024. This is in line with what we expected but I think a lot of tax advisors breathed a sigh of relief.

One of the most interesting areas of focus was investment in intensifying efforts to combat tax evasion and avoidance. Personally, I welcome the consultation into targeting the promotors of marketed tax avoidance. The schemes that they sell are contrived, generally ill thought through and without a commercial purpose. The government plans to invest an additional £300m into HMRC to enhance compliance activities. This investment must be properly considered. HMRC needs to focus on investment in technology to improve efficiency and customers service, particularly with ‘Making Tax Digital’ (finally) coming in. There needs to be a focus on better quality (and better paid) roles within HMRC to begin to tackle the issues of tax evasion and marketed tax avoidance. More letters, more enquiries, more poorly thought through questions and seemingly templated responses are not the answer. Technology enabled and better trained staff with a good understanding of tax legislation is needed.

A further consultation published around ‘developing a new process giving major investment projects increased tax certainty in advance’. Corporation tax will be the main tax on which advance clearance could be obtained. In addition, there is a consultation regarding whether advance clearance for R&D tax reliefs might ‘reduce error and fraud in the R&D reliefs, provide certainty to businesses, and improve the customer experience.’

The OBR halved its forecast for 2025 GDP growth from 2% as projected in the October budget, to just 1% now, which is a significant setback for the government’s economic growth strategy. There is clear emphasis on infrastructure and housing projects with a commitment to delivering the government’s promises around house building by 2029 but what we really need now is an immediate stimulus to growth. The OBR forecast that the planning reforms will deliver growth of just 0.2% in 2029 so there is still a way to go. We are working with tight margins. The government needs to give people a reason to get back into employment, to strive, to build businesses and to generate wealth. The cuts to welfare have sparked fierce debate and does not address the real barriers to growth in the UK.

Uncertainty prevails. Whether tariffs will extinguish any fiscal buffer we might have, will become clearer in the coming days. Will there be further increases to taxes in the 2025 Autumn budget if the economic environment doesn’t pick up? I don’t think anyone is ruling that out. What are your thoughts?

Emma Queen is a Business Tax Partner at S&W and has worked in the Cambridge ecosystem as a tax and business advisor for nearly two decades. Prior to joining S&W she worked at a Big Four firm. She can be reached via LinkedIn or by email emma.queen@swgroup.com