The Chancellor, Rachel Reeves, was keen to remind us that today’s announcements were not a Budget, and that the Spring Statement did not raise any taxes for “working people”. Whilst that was a relief for many taxpayers, a closer examination of the documents published alongside the Spring Statement reveals a raft of tax announcements.
Administration
Countering tax avoidance and closing the “tax gap” have become staples of any Chancellor’s announcements over the last few years, and the Spring Statement was no exception. HMRC is consulting on a raft of measures, including:
> “Closing in” on promoters of marketed tax avoidance schemes through the expansion of the Disclosure of Tax Avoidance Schemes (DOTAS) regime;
> Enhancing HMRC’s ability to tackle tax advisers “facilitating” non-compliance; and
> Reforming the penalties applying to penalties for inaccuracies in a return and failure to notify liability.
In addition, debt management capacity is to be expanded with a further 500 debt management staff and 600 compliance officers are to be recruited with the aim of raising £3bn up to 2029/30.
The threshold for mandatory quarterly reporting under Making Tax Digital for Income Tax (MTDFIT) for those with self employment and/or rental income is £50,000 for the first year (2026/27), reducing to £30,000 for 2027/28. It was confirmed that the threshold will reduce further to £20,000 for 2028/29 and later years.
Late payment penalties for VAT and income tax for those within MTDFIT will be increased from April 2025. The penalty will be 3% of the tax outstanding after 15 days, plus an additional 3% if the tax remains unpaid after 30. A further 10% penalty applies once the tax is 31 days late or more. At present, a 5% penalty applies where income tax is unpaid after 28 days, so this represents a serious escalation in penalty levies.
From summer 2025, employed individuals liable to the High Income Child Benefit Charge will be able to report their family’s Child Benefit payments through a new digital service and pay HICBC directly through PAYE, without the need to complete a self assessment tax return.
HMRC will also re-start recovery of tax debts directly from taxpayers’ bank accounts. This measure was first put in place in 2015, but has been little used following the Covid-19 pandemic. Whilst most would agree that HMRC should use its powers to recover taxes which are properly due and payable, direct recovery of debts has proved controversial, with many raising concerns about potential lack of taxpayer safeguards.
Personal Tax
There are no changes to income tax, national insurance, capital gains tax or inheritance tax rates or allowances.
The government is continuing to look at the reform of ISAs. It had been rumoured that the amount of cash which could be invested in an ISA each tax year would be reduced from £20,000, however, there were no announcements of any immediate changes.
Additional technical information has been made available relating to the tax treatment of employees acquiring shares in companies which have signed up to the new Private Intermittent Securities and Capital Exchange System (PISCES). Where the company’s shares have been admitted to PISCES, they will be treated as “readily convertible assets and income tax and Class 1 NICs must be deducted under PAYE.
Business Tax
There were relatively few announcements relating to business tax.
Continuing the tax avoidance crackdown theme, HMRC is to work closely with Companies House and the Insolvency Services to tackle “phoenixism”, where a company is wound up with substantial debts outstanding (usually including taxes owed to HMRC), and a new company is set up to carry on the same business. To counter these arrangements, the government is looking to increase the use of upfront payment notices and expand the situations in which liabilities can be recovered from directors.
A consultation is taking place on a revised system of advance clearances for R&D relief, and a new process for “major projects” is to be introduced.
The government also reaffirmed its commitment to reforming business rates, and will publish an interim report setting out “a clear direction of travel” for reform, with further information to be made available at Autumn Budget 2025.
A Building Safety Levy will apply from 1 October 2026 to new residential developments in England (with certain exemptions). There will be exemptions for affordable housing and developments with fewer than 10 units, plus a 50% discount on the levy for previously developed land.
Contact
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