After an eye-watering Autumn Budget six months ago, there were no tax cuts announced in the Spring Statement. Indeed, Rachel Reeves had already promised no huge surprises ahead of her second fiscal statement as Chancellor of the Exchequer, the Spring Statement.
Among the key headline items were:
- cuts to sickness and disability benefits producing projected net savings of £4.8 billion a year by 2029/30;
- tax administrative reforms aimed at raising over £1 billion a year;
- a £3.25 billion Transformation Fund to improve public sector productivity;
- confirmation that the Treasury is “looking at options for reforms to Individual Savings Accounts”, with the emphasis on the balance between cash and equities; and
- a projection from the Office for Budget Responsibility (OBR) that growth in 2025 would be 1% – half the level projected last October – but that each of the subsequent four years would see higher growth than last autumn’s.
There were no fresh tax changes this time round, which is welcomed from a financial planning perspective, following the already impactful October Budget. There was, however, detail in the OBR’s forecast documents that predict changes from the Budget will contribute an additional £2.5 billion from Inheritance Tax by the end of the decade, with receipts in total increasing from £8.4 billion in 2024/25 to £14.3 billion in 2029/30.
There were no further details on the previously announced Inheritance Tax changes to pensions and we don’t expect to know more until later this year after we hear more following the outcome of the consultation. Changes in this area are not scheduled to occur until April 2027, so there is still plenty of time to plan, and we will communicate further with you when we know more.
In the meanwhile, with the short proximity of the tax year end, it remains sensible to focus on maximising your ISA and pension allowances, in line with your personal plan. We don’t know how rules around these might change in future, but for now they should remain a key part of your tax optimised planning.
Overall, and as largely predicted, there were no major changes of direction announced in the Spring Statement, but it was clear that there is less room to manoeuvre within the UK’s finances.
If you have any questions about the Spring Statement, or your wider financial position, please get in touch.
The information and/or any reference to specific instruments contained in this article does not constitute an investment recommendation or tax advice. The contents of the article have been prepared solely for information purposes. The article contains information on financial products and services and such information is designed for and addressed solely to individuals seeking generic industry information. This document reflects our understanding of current legislation. Past performance is no guide to future returns.