Spring Statement 2025 summary

For individuals aged 21 and older, hourly wages will increase by 6.7%, rising from £11.44 to £12.21, resulting in an annual salary of approximately £25,500 for a 40-hour workweek.

Those aged 18 to 20 will see a 16% wage increase, from £8.60 to £10.00, leading to around £21,000 per year for full-time work.

Qualifying apprentices will receive an 18% raise, from £6.40 to £7.55 per hour, equating to about £16,000 annually.

These changes will raise employers' costs, particularly concerning pensionable pay.

Employers must reassess the eligibility thresholds for salary sacrifice to ensure that any employee participating in pension, car, holiday, and/or cycle-to-work schemes can do so without falling below the applicable NMW rate. This can be quite complex, especially when considering factors beyond payroll, such as worker categorisation.

Additionally, employers should review their reward strategies and structures – a good starter for ten is our questionnaire. 

The increase will be 1.2 percentage points, raising the rate from 13.8% to 15%. Additionally, the Secondary Threshold for employee earnings, which triggers employer National Insurance Contributions (NIC), will be lowered from £9,100 to £5,000.

As a result, employers will see an increase in their NIC costs of £926 for each employee earning £35,000 per year, effective from 6 April 2025.

Employers of all shapes and sizes will therefore need to manage this increase by reviewing costs, looking at ways they can mitigate increases and think about how they can remain resilient in a challenging market. Salary sacrifice, expense analysis, non-cash benefits and longer-term incentives are good places to start here.

The CGT rate applied to carried interest will increase to 32% (currently 28%), from 6 April 2025. From April 2026, carried interest will be subject to Income Tax, although there will be “bespoke rules to reflect its unique circumstances”. 

The tax rate applied to BADR and IR assets will increase to 14% from 6 April 2025 and to 18% in April 2026.  

From 6 April 2025 the concept of domicile will be disassociated from UK taxation and UK residents will generally be taxed on their worldwide income and gains. We still await clarity on how the new rules will apply.

This change removes existing tax benefits available to non-doms who can elect to be taxed on the Remittance Basis. A new Foreign Income and Gains (FIG) regime will be introduced to provide a short, but potentially valuable, option for ‘long-term non-residents’.  Those who can access this regime by having been non-UK resident for 10 years will obtain a tax exemption for non-UK income and gains during the first four years of UK residency.

As part of the transition to the new regime, the Temporary Repatriation Facility (TRF) will be available for those who have previously claimed the Remittance Basis and wish to bring funds into the UK. The tax rate for funds remitted under the TRF will be 12% in the first 2 years, increasing to 15% in 2027/28. 

The existing Overseas Workday Relief (OWR) concept will also be incorporated into the new regime, and extended to four years, albeit with an overall limit on the benefit. 

For CGT purposes, Remittance Basis users will be able to rebase personally held foreign assets to the 5 April 2017 market value , where certain conditions are met, so only increases in value from that date will be taxable.

Similarly, from 6 April 2025, an individual’s Inheritance Tax (IHT) status will be determined by residency rather than domicile.  Individuals who have been resident in the UK for at least 10 of the past 20 years will have their worldwide assets subject to IHT.  Those who have been residents for 10 years or more years will have a tail of between 3 and 10 years if they cease to be UK resident. 

UK situs assets will remain subject to IHT, as they are currently.

From April 2026, only the first £1 million of combined agricultural and business property will qualify for BR and APR relief at 100%, any value above this will only obtain relief at 50% (effectively reducing the main IHT rate from 40% to 20%).

In addition, the rate of BR that applies to AIM shares will be reduced from 100% to 50% from April 2026, without the first £1 million receiving 100% relief.

From April 2027, pension funds will be subject to Inheritance Tax (IHT). Proposals suggest the individual's nil rate band will be apportioned between the normal estate and the pension fund, leading to a complex calculation of how much tax is due on and from the pension fund, and how much comes from non-pension assets.

Read more on these changes.

Income Tax and employee National Insurance (NI) thresholds will stay the same until April 2028, after which they will rise with inflation. This will lead to more taxpayers moving into higher tax bands, known as "fiscal drag". 

Additionally, the increase in the National Minimum Wage (NMW) will bring more into the Income Tax net. Previously, low earners would only have to pay Income Tax if they worked over 20.7 hours per week, but now those working just 19.8 hours will also be affected.

More will now feel the stealthy creep of IHT under the Government’s plans to extend the freeze on the NRBs and RNRBs for a further two years up until 2030. People are already experiencing an increase in the value of their homes, and other assets meaning more will be dragged into paying tax on their wealth. The freeze means that proper estate planning is now more important than ever before.

The Spring Forecast is an economic and Fiscal Forecast which was published on 26 March 2025. 

The Spring Statement was released on 26 March 2025.

The Spring Statement 2025 is aligned with the OBRs and National Audit Act 2011 to produce two forecasts each financial year. The Spring Statement sets out the government's economic and fiscal policies for the next year. This includes plans for future taxation changes, an economic outlook and the government’s growth mission.

The Chancellor remains committed to one major Budget a year, in the Autumn.