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The Chancellor of the Exchequer, Rachel Reeves, delivered the Spring Statement on Wednesday 26 March. As expected, this was mainly an economic update coupled with further spending and welfare cuts. No tax rises were announced. Effectively the Chancellor deferred any tax rises to the Autumn Budget later this year in line with the Government's policy of just one major fiscal event every year in the Autumn. Tax rises have already commenced in April when the Chancellor's Autumn Budget 2024 changes to employer's national insurance contributions began.
Although the Office for Budget Responsibility (OBR) Improved its forecasts for economic growth in 2026 and beyond, this was before the announcement the very next week by President Donald Trump of a range of sweeping tariffs on goods imported into the US from countries across the world. The OBR also halved ¡ts growth forecast to 1% in 2025.
With geopolitical uncertainty continuing, the impact of global trade policies on the UK economy needs to be carefully monitored ahead of the 2025 Spending Review and Autumn Budget. What is clear is that UK businesses have entered a time of economic slowdown.
On the tax front, a further package of measures to close the tax gap featured with the aim of raising over 1 billion in additional gross tax revenue per year by 2029/30. As part of this, it was announced that Making Tax Digital for Income tax is being extended to even smaller businesses from April 2028.
CLOSING THE TAX GAP
Building on the package of measures announced at the Autumn Budget, a further series of announcements were made.
Debt management and compliance investment
According to the Government, at the end of 2024, unpaid tax liabilities owed to His Majesty's Revenue and Customs (HMRC) was over £44 billion, more than double the level five years ago. To reduce this, the Government is further investing in HMRC's debt management capacity including "an innovative test and learn pilot to collect more aged debts whilst also moving towards more automated debt recovery" including for lower value tax debts.
The Government is also investing £87 million over five years in HMRC's existing partnerships with private sector debt collection agencies. An additional £114 million is being invested over the next five years to recruit...