Highlights from the Spring Statement were few and far between from a personal finance perspective, with very few changes that impact boosst clients.
HMRC take on Tax Fraudsters: A significant increase in powers available to HMRC, coupled with additional resource is expected to bring in a further £1 billion of lost tax.
Government Spending Reprioritised: Including a cut for Overseas Aid down to 0.3% of GDP and an increase to defence spending of 2.5% of GDP.
Welfare Reforms: Significant welfare cuts were announced, including reductions to Personal Independence Payments (PIP) and Universal Credit, projected to save the government £4.8 billion annually.
National Living Wage: A 6.7% increase in the National Living Wage will take effect from April 1, 2025, resulting in a £1,400 annual pay rise for approximately three million workers.
A Growing Tax Burden: The Office for Budget Responsibility (OBR) project the tax burden will hit a record high next year due to the impact of the national insurance hike and people being dragged into a higher tax rate. Their published projected show tax revenues increasing from 35.5 per cent of GDP to 37.7 per cent in 2027-28, described by the Office for Budget Responsibility as a “historic high”.
Inheritance Tax (IHT): The Office for Budget Responsibility (OBR) has revised its IHT forecasts, projecting revenues of £66.89 billion between 2024/25 and 2029/30 – an increase of £2.44 billion over previous estimates. Approximately 9.7% of estates are expected to be liable for IHT by 2029/30, of course this is a much more significant % for boosst clients. The new caps on Agricultural Relief and Business Relief are set to take effect in April 2026 of £1m per person, with a tax rate of 20% thereafter. We are supporting boosst clients holding business or agricultural assets to reassess their estate planning strategies in light of those changes.
Individual Savings Accounts (ISAs): While no immediate changes were announced, the government is exploring reforms to ISAs. This could lead to future restrictions on cash ISA contributions, encouraging savers to become investors with a reduced allowance for cash and a greater allowance for the stocks and shares element. To work, our view is that any new proposal will need to be supported with public education resources and a different regulatory approach. We often meet prospective clients who are holding far more in cash than is appropriate, with no comprehension of the risks (namely inflation) and they believe that cash is low risk as it is not volatile. Of course, this could not be further from the truth, and for funding your long-term goals, accepting some price volatility is a far less risky route than holding a steady but depreciating asset. If a combination of education and some behaviour adjusting tweaks to allowances could work in tandem, we could help to move the dial… taking a nation of savers and converting them to a nation of investors.
Capital Gains Tax (CGT): Following last autumn’s increase in CGT rates, to 18% for basic rate taxpayers and 24% for higher rate taxpayers, and the reduction of the tax-free allowance to £3,000, tax-efficient investment planning has become increasingly important. Business owners will see a rise in the Business Asset Disposal Relief rate from 10% to 14% in April 2025. We have various routes and ideas to share if you are approaching a business exit.
Pensions: The statement did not provide an update on the proposed inclusion of pensions within the scope of IHT from April 2027. The consultation period remains ongoing, with the team here keeping a close eye on updates and actively adapting clients’ financial plans in preparation for this significant change.
Our guide to the Spring Statement offers a more detailed breakdown…
To download our full guide, click the image below:
