Spring Statement 2025: What could be in the Chancellor’s forecast?

Following last year’s Autumn Budget, the Chancellor announced that she had commissioned the Office for Budget Responsibility (OBR) to produce an Economic and Fiscal Forecast, which will be presented and published on Wednesday 26 March 2025.

In principle, the Spring Statement is not expected to introduce any changes to tax policy, particularly since many of the measures announced in the Autumn Budget have yet to be implemented.

That being said, there is feeling amongst many that the Spring Statement could become a mini-Budget. This is largely down to the fact that since the Budget announcement, economic growth has been slower than hoped for and government borrowings have increased. Resurgent inflation could also lead to increasing wage demands.

This means that at some point soon, the Chancellor will have to decide between further tax increases or cuts to spending. 

While we cannot predict the future, it would be unwise to overlook the significance of this forecast when thinking about what’s next for your money. Being aware of the potential changes allows for better informed decision making.

In the lead up to the 2024 general election, Labour’s manifesto pledged not to raise income tax, employee National Insurance (NI), VAT or corporation tax. The changes announced in the Autumn Budget to employer NI combined with the potential threat of US tariffs mean that tax rises could be damaging to businesses and the economy. This means that it’s more likely that in the Spring Statement we’ll see spending cuts instead of tax rises. 

Tax rises being unlikely doesn’t necessarily mean that freezes to tax allowances are off the table. We could see current freezes to personal allowances and thresholds be extended to beyond 2028. The freeze to income tax means that more people could be pulled into higher thresholds as their salary increases. It will also mean that many state pension recipients will pay income tax, despite not having other income.

The threshold on the value of an estate for inheritance tax (IHT) purposes is also frozen until 2030. This is also known as the nil rate band (NRB) and it is currently set at £325,000. This freeze along with changes announced to the IHT treatment of pensions has led many people to look at their options when it comes to making financial gifts during their lifetime. Given the focus on reviewing and removing a number of IHT-saving  measures in the Autumn Budget, it is not beyond the realms of possibility that an overhaul of the current gifting regime could be announced in the Spring Statement.

There has been speculation that the Chancellor could overhaul the current rules surrounding ISAs this year, including changes to the overall limit (currently £20,000) or the amount of cash you can hold in your ISA to nudge cash savers towards investing in stocks and shares instead.

It is unlikely that changes to the ISA rules will be announced in the upcoming Spring Statement, but this speculation combined with how close we are to the end of the current tax year and the start of the 2025/26 one, mean that investors should be thinking about their available ISA allowances sooner rather than later.

If you want to know more about what the Spring Statement and changes outlined in the Autumn Budget 2024 could mean for your future finances, please book an appointment or speak to your usual Evelyn Partners contact.

Sources:

¹ Gov.uk, Chancellor commissions Spring Forecast on 26 March 2025, 16 December 2024