The 2025 Spring Statement, was an opportunity for the Chancellor to announce the progress made achieving the Government’s economic objectives.
Overview
Broadly speaking, the government intends that day-to-day public spending will be matched by revenue by 2029-30. There have been changes to HMRC's administration and collection as part of this process. These are discussed below.
The 2025 Spring Statement - Making Tax Digital
As mentioned previously, Making Tax Digital was one of many proverbial cans kicked down the road by the the last government.
The current government intends to implement Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) at an early date.
From April 2028, MTD for ITSA) will apply to landlords and sole traders with qualifying income over £20,000. This is a significant shift, moving the original implementation dates (previously set for April 2029 and 2030). It also expands the scope to include more small businesses.
What if You Earn Less Than £20,000?
If your income is below the £20,000 threshold, there's no need to join MTD just yet. However, the Government plans to continue reviewing options and potential solutions for those in this group, so watch this space!
However, not everyone will be required to join MTD. The Government has introduced clear exemptions for certain groups of taxpayers. There will be further guidance and legislation to clarify the criteria for each of these exemptions issued at a later date.
Clearly the Government would like to encourage businesses to adopt digital processes sooner rather than later. As a result, businesses will benefit from better financial visibility and improved record-keeping.
However, this will mean reliance on third party software in order to comply with MTD for ITSA. These upcoming change could prove daunting for those businesses (and accountants!) who still lack the IT knowledge/skills to comply with the new system.
Other changes from 6 April 2026
If you have an accounting date of 31 March you'll be able to operate MTD from 1 April in the first year of operating MTD. This measure has been introduced to avoid the burden of manual adjustments at the year end.
HMRC will also be granted the power to cancel or reset late submission penalty points and cancel any associated financial penalties.
Furthermore, there will be an increase in late payment penalties for MTD for both VAT and ITSA. This measure is designed to 'persuade' taxpayers to pay their tax on time.
The 2025 Spring Statement - Consultation on R&D advance clearances
HMRC has launched a consultation aimed at reducing errors and fraud, providing greater certainty to those businesses making R&D claims. It's widely acknowledged that HMRC fell asleep at the wheel during Covid, hence their increased focus on current R&D tax claims.
Until now, there has been a low uptake for the existing Advance Assurance procedure for R&D tax relief - probably because it's optional. This limited engagement raises questions about the procedure's effectiveness and accessibility.
The goal is to reduce errors and fraud and provide certainty to businesses. The consultation seeks input on whether such a system would achieve these objectives and how it might best operate. One argument for increasing the reach of advance clearance procedures is to provide companies with certainty before making significant investments.
Potential Stages for Assurance
The government has identified three possible stages where a form of Advance assurance may be beneficial:
The consultation will run from 26 March 2025 to 26 May 2025, inviting views from businesses of all sizes.
It is being launched jointly in conjunction with one on proposals for a new process to provide increased tax certainty in advance for major projects. However the latter consultation is aimed at much larger projects where costs will run into £100's of millions.
The 2025 Spring Statement - employment taxes
PISCES - tax implications for employees
HMRC has published a technical note which provides guidance on the tax implications for companies and employees where a company has shares traded on the Private Intermittent Securities and Capital Exchange System (PISCES).
High-Income Child Benefit Charge (HICBC)
From this summer 2025 Employed individuals liable to the HICBC will be able to report their family’s Child Benefit payments through a new digital service. As a result, they can opt to pay HICBC directly through PAYE, without the need to register for Self Assessment.
The 2025 Spring Statement - compliance and admin
A series of robust measures are being introduced aimed at enhancing tax compliance and administration. The objective of these measures is to close the tax gap and generate over £1 billion in additional gross tax revenue annually by 2029-30.
Direct recovery of tax debts
HM Revenue & Customs (HMRC) will resume the direct recovery of tax debts from individuals and companies that have the means to pay but choose not to. Additionally, the government will explore options to automate the collection of lower-value tax debts, streamlining the process and improving efficiency.
Broader Measures to Address the Tax Gap
This government appear to be committed to taking decisive action against behaviour leading to lost revenue and adversely affect others - for example tax fraud. Key initiatives will include:
The 2025 Spring Statement - summary
Plenty of additional measures have been designed to improve tax collection for The Treasury. Depending on how the economy performs over the coming months, this could pave the way for more tax increases in the Autumn.
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