Spring statement speculation
Rachel Reeves will present a spring statement to Parliament on 26 March 2025 alongside an economic and fiscal forecast from the Office for Budget Responsibility (OBR).
The media is widely reporting that high borrowing costs and low economic growth may break the Chancellors strict economic rules that state that there will not be any borrowing for day to day spending and reducing national debt as a share of the economy. This is before taking into account any increase in defence spending commitments that might be made over the coming weeks.
In order to ‘balance the books, ’ there is the fear of further tax rise announcements, even though Rachel Reeves has announced in public that this would not happen, reiterating her promise not to make policy changes in the Spring Forecast – her mantra has been only one budget event a year.
11th March 2025
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Gavin Jones See profile
Speculation on ‘tax rises’ may include a continuation of the freeze on income tax thresholds and allowances beyond 2028, perhaps to 2030, in line with the extension of the freeze to the nil rate bands for inheritance tax. It could be argued that the extension of the freeze wouldn’t breach Labour’s manifesto pledge not to raise income tax.
The alternative to tax rises is a squeeze on spending with the rumour mill currently highlighting welfare spending cuts as the focus, with an announcement from the Department of Work and Pensions (DWP), reportedly due next week.
There have also been rumours that the Government is considering making changes to Individual Savings Accounts (ISAs) in the Spring Statement.
Savers currently get a £20,000 ISA allowance each year, which they can put into stocks and shares or cash savings. The interest or gains they make are then free from tax.
There have been suggestions that the cash based ISA could have the allowance cut, possibly as low as £4,000 or even scrapped altogether (although this is considered very unlikely).
The aim behind this would be to encourage more people to invest in stocks and shares, which could boost growth in the UK.
We may also see announcements about some of the major changes that have affected many of our clients – Inheritance tax applied on Pensions and the reducing allowance for Agricultural and Business Property Relief.
Once we get the detail of any announcements on 26 March, we will provide details of how it may impact on your finances.