The Chancellor of the Exchequer, Rachel Reeves, delivered her long-trailed economic update to Parliament on 26 March 2025.
Following days of leaks and speculation, it was widely expected that there would be no new tax raising measures announced, following the blockbusting employer National Insurance increases applied to employers in the October 2024 Budget, which are now about to come into operation from 6 April 2025. Instead, the focus of the Spring Statement was the provision of an update on the loss of the headroom in the Chancellor’s fiscal rules between now and 2029/30, as a result of worsening economic forecasts and indices and how the economy could still operate to be within the fiscal rules by the end of this Parliament.
The pre-announced changes to benefit entitlements were confirmed. There was also peripheral tax measures announced to provide more funding to HMRC to invest in headcount and technology to capture more third-party financial data about taxpayers’ affairs, significant reform and investment into HMRC’s Debt Management processes and renewed focus on reducing tax evasion and tax avoidance. The aim of this was to increase collection of additional tax revenue of £7 billion from taxpayers before 2029/30. This is to be achieved by improving debt collection, reform of the late payment and late submission penalty regime, with a new consultation being launched on those, more measures against promoters of tax avoidance schemes, but also as a result of an unexpected extension of the Making Tax Digital (MTD) regime applicable to sole traders and landlords with another 900,000 sole traders and landlords being brought into the MTD regime from 6 April 2028.
The reform of the HMRC Debt Management procedures aims to reduce outstanding and unpaid tax debts. As at March 2024, uncollected HMRC tax debt over 12 months old stood at £21 billion. The measures announced in the Spring Statement provide HMRC with another 600 debt collection staff on top of the 1,800 announced in the October Budget. Another 500 new staff will be recruited from April 2025 to target non-compliance. I therefore expect that we will see increasing numbers of compliance checks and enquiries being launched by HMRC later this year, as these new HMRC officers are fully trained. M+A Partners is shortly issuing our Tax Investigation Service renewal documents to all of our clients, so I urge you to consider this service if you do not already use it. If you would like more information on this service, please click here.
The message from the government is very clear – get on top of your tax affairs and tax liabilities and keep on top of it because if not, HMRC will be looking.
The government announced a whole series of new consultations on various tax measures and so we will bring you news on these as we have more information to share later this year. The next Budget will be Autumn 2025, and this will include tax measures at that time.
If you have any queries or concerns about your tax affairs, please get in touch with me using the details below, or reach out to your usual M+A Partners contact.
