As promised, Rachel Reeves, Chancellor of the Exchequer, announced no new tax changes in her Spring Statement.
Many of the changes she announced in her October Budget are however due to come into force in the next few days.
Read our Budget Summary 2024
Economic Forecast
The statement was brief at under 40 minutes and covered the current and forecast economic condition for the Country.
The growth forecast for 2025 has been dropped from 2% to 1%. We aren’t alone in a drop in growth forecast as the Organisation for Economic Co-operation and Development has downgraded it’s 2025 growth forecast for all of the G7 economies.
Growth is due to slightly increase in future years with the Office of Budget Responsibility forecasting growth between 1.7% and 1.9% over the next 4 years.
Inflation is forecast to rise slightly in 2025 to 3.2% up from 2.5% in 2024, but dropping back to 2% in 2027 and the Bank of England base rate recently dropped to 4.5%.
Consultations
A brief comment in a Chancellor’s statement or indeed something that isn’t said can often be as interesting as what is said.
A number of consultations were opened on 26 March 2025 which may result in future policy changes. Four such consultations target tax avoidance and ensuring the right amount of tax is paid at the right time by all tax payers. This can often lead to increases in targeted enquiries, changes in penalty regimes and an overall increase in HMRC’s powers.
Making Tax Digital for Income Tax – MTDIT
MTDIT has been talked about for many years but implementation has been pushed back year after year as the systems weren’t in place. However, MTDIT will be mandatory from 6 April 2026 for those persons with self employed and/or rental income of over £50,000 (combined).
MTDIT will require the quarterly submission of self employed and/or rental accounts data through MTD compatible software.
Although HMRC are still refining the requirements, making changes to processes and announcing further changes, implementation will be mandatory from next year.
AC Mole will be running a number of MTDIT events later this year which will explain the requirements and provide practical advice on implementation.
For more information contact our Partner, Amanda Gunter, who heads our Tax Team based in Taunton.
