The Chancellor’s Spring Statement 2025 brings some key updates that business owners should be aware of…
While there were no major tax surprises, the changes around employer National Insurance contributions, the phasing out of the Furnished Holiday Lettings regime, and the widening scope of Making Tax Digital for Income Tax are all likely to affect how businesses operate and plan ahead. In addition, rising National Minimum Wage rates and updates to capital allowances mean that now is the right time to review your payroll structure and investment plans. This Statement was about laying the groundwork for longer-term reform, so understanding these shifts early is crucial for staying ahead.
What Changed: A Cautious Outlook for Growth
- Growth forecast for 2025 cut from 2% to 1%
- Fiscal headroom has narrowed, leaving less wiggle room for giveaways
- Chancellor Rachel Reeves chose control over surprises, focusing on long-term stability
Spring Statement FAQs
How will the increase in employer National Insurance contributions affect my business?
From 6 April 2025, the employer NIC rate rose from 13.8% to 15%, and the threshold at which employers start paying NICs dropped from £9,100 to £5,000. This means most businesses are now facing higher employment costs. However, the Employment Allowance has increased to £10,500 and will be available to more employers, which may help offset some of the additional cost.
Find out how your director salary will also be affected by the National Insurance changes.
Do I need to prepare for Making Tax Digital, and if so, when?
Yes, depending on your income level. MTD for Income Tax will apply from:
- April 2026 for sole traders and landlords earning over £50,000
- April 2027 for those earning over £30,000
- April 2028 for those earning over £20,000
If your income falls within these brackets, now is the time to review your record-keeping systems and speak to us about digital tools.
What does the abolition of the Furnished Holiday Lettings regime mean for me?
If you let out furnished holiday property, the special FHL tax treatment will end from 6 April 2025. This means:
- Loss of access to certain pension tax reliefs
- No more CGT reliefs like Business Asset Disposal Relief or rollover relief
- Restriction of finance cost relief to the basic rate
- Capital allowances will be replaced by the domestic items replacement relief
It’s important to assess the long-term viability of your property business and consider restructuring if needed.
Will the changes to Capital Gains Tax affect the sale of my business or assets?
Yes. From 6 April 2025, the rate for Business Asset Disposal Relief increases from 10% to 14%, and will rise again to 18% in April 2026. If you’re planning to sell your business or assets, timing and structure will be more important than ever to minimise tax exposure. Talk to us early to explore your options.
What support is available for businesses facing higher wage and tax costs?
While direct support is limited, the increase in the Employment Allowance to £10,500 and continued access to full expensing and the Annual Investment Allowance could help offset some rising costs. Strategic tax planning and real-time financial insight will be key to managing cash flow effectively.
Does the Spring Statement affect how I should pay myself as a director?
Yes. With employer NICs increasing, and dividend allowance changes in recent years, the old model of a low salary topped up with dividends may no longer be the most tax-efficient option. It’s worth reviewing your remuneration strategy now to ensure you’re not overpaying tax unnecessarily.
Should I be concerned about the government’s focus on tax enforcement and compliance?
Yes, especially if you’re behind on digital record-keeping or filing deadlines. HMRC is increasing penalties for late VAT and Income Tax returns and exploring stricter enforcement against non-compliance. Being proactive, accurate and digital in your approach to tax will reduce your risk and stress.
Choose your Spring Statement 2025 topic ...
Deborah Edwards, Practice Director at Harland Accountants ,shares her views on what the Spring Statement 2025 means for business owners like you…
“The Spring Statement landed a couple of weeks ago, and while there were no headline tax surprises, the detail paints a clear picture: we’re operating in an environment of tighter margins, greater scrutiny, and rising pressure on small business owners.
Costs are going up—through higher employer NICs, wage increases and the phasing out of long-standing tax reliefs. At the same time, the government is doubling down on digital compliance and enforcement. For many businesses, that means it’s time to reassess how you’re working and whether your current model is still sustainable.
Here are the three things I think business owners should be focusing on right now:
1. Understand your people costs
The employer NIC rate has now increased to 15%, and the threshold at which employers start paying has dropped to £5,000. Combined with National Living Wage rises, this is a significant jump in employment costs for many. The Employment Allowance has gone up, which helps, but this is the time to look closely at your payroll and pricing—are your current margins still workable?
2. Don’t just digitise—use the data
With Making Tax Digital rolling out further from 2026, now’s the time to get your systems in place—not just for compliance, but for clarity. Real-time financial data isn’t just about avoiding penalties. It’s your most powerful tool for decision-making when cash flow is tight and every choice counts.
3. Revisit your property strategy
The tax advantages of Furnished Holiday Lettings are being phased out from this month. If you operate in tourism or property, this could affect your pension planning, tax reliefs and how you report income. Now is the time to reassess your structure and explore alternative options.
If you’re ready to look under the bonnet and make confident decisions about what’s next, we’re here to help.”
From 6 April 2025, employer NICs rose from 13.8% to 15%. The threshold at which employers start paying NICs dropped to £5,000, increasing the cost of employment for many businesses. However, the Employment Allowance rose from £5,000 to £10,500 and will now be available to all eligible employers, regardless of the size of their NIC bill. Here we share more information about how this could impact the way you pay yourself as a Company Director.
MTD for Income Tax will extend to include sole traders and landlords with income over £20,000 from 6 April 2028. Penalties for late filing under MTD will also increase from April 2025, making digital compliance more critical than ever. Find out exactly what business owners need to know about MTD here.
From 6 April 2025, FHL properties will no longer benefit from special tax rules. They will now be treated as standard property businesses, with key implications for pension contributions, capital gains, and allowable expenses. Find out more about the changes to Furnished Holiday Lettings here.
Corporation Tax rates remain unchanged, with the main rate staying at 25%. Full expensing for qualifying plant and machinery continues, and the £1 million Annual Investment Allowance remains in place. Relief for zero-emission cars and EV charging equipment has been extended to 2026.
From 6 April 2025, the National Living Wage rose to £12.21 an hour for those aged 21 and over. The 18–20-year-old rate increased to £10ph, a 16.3% rise, the largest on record.
CGT rates for most disposals increased to 18% (basic rate) and 24% (higher rate), aligning with residential property rates. Business Asset Disposal Relief and Investors’ Relief rates will also rise gradually over the next two years.
The VAT registration threshold remains at £90,000. Several HMRC consultations are underway to strengthen enforcement, modernise data collection, and improve R&D tax relief processes.
Your next steps
The Spring Statement 2025 signals a period of change for business owners, with rising employment costs, tighter tax rules and increased digital compliance. While some measures may feel like added pressure, there are also opportunities to plan ahead, improve efficiency and make smarter financial decisions.
If you’re unsure how the changes might affect your business—or you’re worried about what to do next—don’t wait. Get in touch with our team for a chat. We’re here to help you make sense of the detail and find the best way forward for your business.
