On March 26, 2025, the Government presented its Spring Statement, offering an update on its economic plans, public finances, and forthcoming tax and spending policies. Chancellor of the Exchequer Rachel Reeves addressed a public increasingly uncertain about the state of the UK economy.

From the outset, it was clear that discussions on fiscal rules and economic forecasts would have tangible effects on people’s finances. While tax increases and cuts were not anticipated, many awaited further details on disability benefits. Public spending, and adjustments to tax-free Individual Savings Accounts (ISAs), stamp duty, and pensions.

One of the most significant policy changes had already been announced the previous week—a £5 billion reduction in working-age welfare benefits. However, the Chancellor was expected to introduce deeper spending cuts after projections showed her initial reforms would not generate the expected savings.

Although the Spring Statement typically carries less weight than the Autumn Budget, sluggish economic growth has fallen short of the Government’s targets. The Bank of England recently revised its 2025 growth forecast downward, fueling speculation about the need for broader economic adjustments.

The Spring Statement Key Points

• According to Rachel Reeves, the Labour government were elected to bring change to the country after a “decade of National renewal”.
• Reeves begins by saying Labour was elected to bring “change”, “security for working people”, and to “deliver a decade of national renewal”.
• That work began in July and the government are proud of what has been achieved in the last 9 months to restore stability. Cutting interest rates 3 times, rebuilding public services and reducing NHS waiting lists for 5 months in a row.
• She also reiterated that 3 million people will be getting a pay rise next week as the living wage increases.
• The next task is to secure Britain’s future.
• Geopolitical unrest is bringing uncertainty to the global economy, impacting impacted public finances and the UK economy.
• Rachel Reeves said Labour are “a government on the side of working people to help Britain reach its potential” and they would continue to “act quickly and decisively in a more uncertain world”
• Labour has an unwavering commitment to being economic stability and bring security to working people.

Crackdown on Tax Evasion

Today’s Spring Statement reinforced the importance of working with a tax accountant to keep your finances in order. As Chancellor Rachel Reeves outlined the government’s efforts with HMRC to tackle tax evasion.

While there are no increases to tax payments, Reeves emphasized that in a time when many are struggling with the cost of living, it is unfair for some to evade taxes.

The government aims to increase the number of tax fraudsters prosecuted each year by 20%, with plans expected to generate £7.5 billion in additional revenue. An estimate verified by the Office for Budget Responsibility (OBR).

Partnering with an accountant ensures your finances comply with Making Tax Digital (MTD) regulations and that your tax obligations are met correctly through self-assessments.

MTD IT Expansion in April 2028

A major update to Making Tax Digital (MTD) was confirmed today, with the income threshold being lowered to £20,000 from April 2028.

Previously, the Autumn Budget announced that MTD would apply to individuals earning over £20,000 by the end of this Parliament. However, today’s statement confirmed that these changes will come into effect earlier than anticipated—from April 2028.

Key implementation dates include:

• First taxpayers required to comply with MTD in 2026/27
• First self-assessment returns under MTD due by 31st January 2028
• Further 900,000 lower-income taxpayers included in April 2028

Additionally, the government is exploring ways to extend digitalisation benefits to four million sole traders and landlords earning below £20,000. Meaning the threshold could be reduced further in the future.

MTD Exemptions & Deferrals

Certain groups will be exempt from MTD, including:

• Taxpayers with a power of attorney
• Non-UK resident foreign entertainers and sportspeople (if they have no other MTD-related income)
• Taxpayers for whom HMRC cannot provide a digital service (specific details remain unclear, and affected individuals must notify HMRC).

Temporary deferrals have also been granted to:

• Ministers of religion
• Recipients of Married Couples Allowance and Blind Persons Allowance (they won’t need to join MTD IT during this Parliament)
• Individuals required to submit an SA109 form (residence/remittance basis pages) – deferred until April 2027

MTD: What This Means for You

We’ve been working closely with FreeAgent and Xero to ensure our clients have access to MTD-compliant software as part of their fixed-fee accountancy package.

Under MTD, you must:

✔ Keep digital records

✔ File quarterly updates

It was previously expected that year-end tax returns could be filed either through software or an HMRC online service. However, today’s statement confirmed that HMRC will not provide a filing option under MTD. Meaning all submissions must go through third-party software—a process they now call a “full software journey.”

If you’re already using Account FineX Outsourcing, you have MTD-compliant software for record-keeping and quarterly submissions, so year-end filing should be straightforward.

However, if you are using alternative software that only supports quarterly submissions, you now have two choices:

• Upgrade to a comprehensive software package that supports the full software journey
• Use two different software packages—one for quarterly updates and another for year-end submissions

If you’re considering switching accountants and want expert support to navigate these changes seamlessly, get an instant quote on our website today!

Labour Party: Supporting Work – Disability Benefits Spending to Decrease from 2026

Rachel Reeves stated, “If you can work, you should, and if you can’t, you should be supported.”

She highlighted that over a thousand people qualify for Personal Independence Payment (PIP) daily. With many unable to reach their full potential due to a lack of support.

Referencing the Office for Budget Responsibility (OBR), Reeves noted that her proposed welfare reforms are projected to save £4.8bn.

Key changes include:

• Universal Credit standard allowance will increase from £92 per week in 2025/26 to £106 per week by 2029/30.
• The Universal Credit health element will be cut by 50% and then frozen for new claimants, aiming to encourage people back into work. This freeze was not anticipated in earlier forecasts.

Although overall spending on disability benefits will continue to rise. A reduction is expected in 2026 and throughout the rest of the forecast period.

Reeves reassured that the benefits system will remain a safety net for the most vulnerable while also supporting their return to employment.

Universal Credit Adjustments at a Glance

✅ Standard allowance increase:

• £92 per week (2025-26)
• £106 per week (by 2029-30)

❌ Incapacity benefits element:

• Cut by 50% and frozen for new claimants

These changes are expected to generate total savings of £3.4bn.

Housing, Education, and Household Income: Key Announcements from Rachel Reeves

Housing: Aiming for a 40-Year High in Housebuilding

Labour is on track to achieve a 40-year high in housebuilding, with a focus on grey-belt land for development. The government targets 305,000 new homes per year by the end of the forecast period.  With a total of 1.5 million homes planned within this Parliament.

Rachel Reeves highlighted that reforming national planning policies alone will facilitate the construction of over 1.3 million homes in the UK within the next five years.

Education: Investing in Skilled Workers

Reeves noted that earlier this week, the education secretary announced £600m to train up to 60,000 construction workers to support the housing boom.

Additionally, 10 new Technical Excellence Colleges will be established across all regions, further strengthening the country’s workforce.

Household Disposable Income: A Boost for Everyday Britons

The government’s reforms are set to make the average person £500 better off per year, according to the Office for Budget Responsibility (OBR).

Reeves emphasized that real household disposable income is now projected to grow at twice the rate forecasted in the autumn budget.