Chancellor of the Exchequer, Rachel Reeves, delivered her Spring Statement on Wednesday 26 March 2025.
As she had alluded to in the days leading up to her speech, there was no tax tinkering to speak of, but it did serve to confirm much of what we learned about in the 2024 Autumn Budget.
Growth of the UK Economy, and investment
The Chancellor confirmed that the growth forecast for UK economy had been halved, from 2% to 1% for the year ahead, but that the Office for Budget Responsibility (OBR) had upgraded the growth forecast from next year.
In addition she laid out plans for further investment, amounting to £2.2 billion, in the operations of the Ministry of Defence, and for further investment in housebuilding.
Making Tax Digital for Income Tax Self-Assessment (MTD ITSA)
In a Technical Note released after the Chancellor’s speech, it is confirmed that MTD for ITSA will be extended to sole traders and landlords with income over £20,000 from April 2028.
Those with income exceeding £50,000 are expected to comply with MTD ITSA from April 2026, and those with income exceeding £30,000 will be brought within scope of the rules from April 2027.
Late payment penalties: VAT & MTD ITSA
Late payment penalties for VAT and Making Tax Digital for income tax Self-Assessment will increase to incentivise taxpayers to pay on time.
From April 2025 for VAT purposes, and April 2026 for MTD for ITSA, where tax is unpaid after 15 days, a 3% penalty will apply, and where the tax remains unpaid after 30 days, a further 3% penalty will be added.
Where tax is unpaid after 31 days, a further 10% penalty per annum will be charged accruing on a daily basis, based on amounts outstanding.
What happens next?
The government will set out its plans for spending and key public sector reforms at the Spending Review which will conclude on 11 June 2025, and the Chancellor will deliver her Autumn Budget later on in the year.
To discuss any of the points covered in this article, or any of the wider changes announced at the 2024 Autumn Budget, please contact our team of experts.
