On 26th March, the Chancellor, Rachel Reeves, delivered her first Spring Budget amid weak growth forecasts and rising borrowing costs- but for businesses, the headline is what didn’t change.
Despite speculation around potential U-turns, the core measures announced in the 2024 Autumn Statement remain firmly in place. Reeves reaffirmed her commitment to strict fiscal rules, even as the Office for Budget Responsibility (OBR) downgraded UK growth projections for 2025 from 2% to just 1% and forecast a £4.1 billion shortfall in meeting those rules.
A Budget Lacking Both Surprises And Relief
No new tax rises were introduced, offering short-term reassurance to many business owners. However, for SMEs hoping for a rethink on some of the more contentious policy changes from last autumn, the silence was telling.
The government confirmed that Making Tax Digital (MTD) for Income Tax will go ahead, applying to sole traders and landlords earning over £20,000 from April 2028. Final policy details will be published ahead of mandatory adoption in April 2026, but now is the time to begin preparing for the shift to compliant digital systems.
With many of the changes now in effect following the Spring Budget, here’s a summary of the key policy changes and what they could mean for your business.
Key Changes for UK Businesses from April 2025
Employer National Insurance Contributions
Employer NI contributions will increase from 13.8% to 15%, with the threshold at which contributions start to apply dropping from £9,100 to £5,000 per year. This change will significantly increase payroll costs, especially for larger employers. However, the Employment Allowance has doubled to £10,500, providing some relief to smaller businesses.
Capital Gains Tax and Inheritance Tax
The basic and higher rates of Capital Gains Tax will rise to 18% and 24% respectively. For those claiming Business Asset Disposal Relief, the rate will increase from 10% to 14% in 2025, and further to 18% in 2026. Inheritance Tax thresholds remain frozen until 2030, but from 2027, inherited pensions will be brought into scope — a key consideration for long-term financial planning.
End of Non-Dom Tax Status
From April 2025, the current non-domicile regime will be abolished and replaced with a residence-based system. For individuals and businesses with international tax planning arrangements, this represents a significant change and will require a strategic reassessment of cross-border structures.
National Living Wage Increase
The National Living Wage will increase to £12.21 per hour for workers aged 21 and over. For those aged 18 to 20, the rate will rise to £10 per hour. This represents a 6.7% increase, aligned with rising living costs, but it will have implications for wage budgets and workforce planning.
Stricter Penalties for Late Payments
From April, penalties for late VAT and Income Tax Self Assessment payments will rise. A 3% penalty will apply at 15 and 30 days past the due date, with a 10% annualised penalty applied from day 31. These changes are intended to improve tax compliance and cash flow discipline across the board.
Benefit-in-Kind Rates for Electric Vehicles
The Benefit-in-Kind tax rate for electric vehicles will rise from 2% to 3% in 2025 and will increase by 1% annually through to 2029. This gradual shift still allows EVs to remain a tax-efficient option for businesses, while encouraging forward planning on vehicle investments.
How Should Business Owners Respond To The Spring Budget?
With no major changes or delays to previously announced measures, business owners must prepare for what lies ahead.
At Nordens, we’re helping clients adapt confidently with practical, forward-thinking support in the following areas:
- Tax Planning and Compliance – Update your strategy now to reflect CGT, IHT and payroll cost changes.
- R&D Advisory – Whether you’re launching new projects or exploring funding options, we can help you maximise opportunities.
- Cost Forecasting – From NI contributions to wage rises, we’ll work with you to model costs and protect your margins.
Got questions about the Spring Budget or need expert advice? At Nordens, we offer assistance with all of your business needs: from your everyday accounting to Advisory, Tax, Audit and more. If you need support with any of the above or just want to speak to a member of the team, get in touch today.
