Spring Statement 2025: What Does It Mean for UK Employers and Businesses

Spring Statement 2025: What Does It Mean for UK Employers and Businesses

Today, Chancellor Rachel Reeves delivered her first Spring Statement as Chancellor of the Exchequer, providing a mid-year update on the UK’s public finances and outlining the economic direction of travel under the current government. While not a full Budget, this Statement offered critical insights for business owners, employers, and professionals looking to plan ahead.

We've had a close examination of the Spring Statement 2025 here at CCS Law. Below, we outline the key announcements, how they affect UK businesses, and what employers need to consider as we move towards a new tax year.

A Cautious Declaration Following Economic Stability

The overall theme from Chancellor Reeves was one of fiscal responsibility. With economic growth running lower than expected, the government now finds itself short by £15bn on projections made in the Autumn Budget. In response, the Chancellor announced cuts to public expenditure—but was upbeat, stating that the UK is "on the side of working people."

The Statement greatly underemphasized the explicit measures to promote business. Instead, it relied heavily on macroeconomic forecasts and more distant hopes of sustained expansion.

Economic Outlook: Slow Recovery, But Brighter Forecasts Ahead

The Office for Budget Responsibility (OBR) now predicts GDP growth of just 1% in 2025—half the rate previously forecast. However, this is expected to rebound in the coming years:

2026: 1.9%

2027: 1.8%

2028: 1.7%

2029: 1.8%

Encouragingly, inflation has dropped to 2.8% as of February 2025, and household disposable income is forecast to grow, offering a potential boost to consumer confidence and spending.

Construction Sector: Investment in SkillsConfirmed

Whilst SMEs overall had little direct support, the construction industry received a particular stimulus. The government has committed:

• £100 million to fund an additional 35,000 Construction Skills Bootcamp placements

• £40 million to create 10,000 construction Foundation Apprenticeships

These actions are intended to close skills gaps and create new pathways into the construction industry.

April 2025: Significant Tax and Employment Changes

Although not mentioned in today's speech, a series of significant changes take effect from 6 April 2025, including:

•Employer NICs rising from 13.8% to 15%

•Employment Allowance increasing from £5,000 to £10,500

•National Living Wage (NLW) increasing from £11.44 to £12.21 an hour (age 21+)

• National Minimum Wage (NMW) rising to £10.00 (18–20 years) and £7.55 (apprentices)

• VAT and Self Assessment late payment charges rising

• Capital Gains Tax (CGT) on share sales rising from 20% to 24%, with

Business Asset Disposal Relief increasing to 14% in April 2025 and 18% from April 2026

Employers and company owners need to examine employment agreements, payroll designs, and budgeting designs prior to implementing these changes. Compliance checks and staff planning can be facilitated by CCS Law.

SME Sentiment: Frustration At Wasted Opportunities

SMEs were anticipating more targeted support in this Spring Statement. Instead, the majority are gearing up for cost pressures due to rising wage rates and employment taxes. As per a study by Dext:

•1 in 3 business executives are concerned about paying payroll

•24% of SMEs have cancelled hiring plans since Autumn 2024

•16% have cut employee hours

Looking Ahead: What Businesses Should Do Now

• At CCS Law, we advise business owners to take proactive steps in response to today’s announcements:

• Check employment and contractor contracts to confirm they reflect changes to wages and tax

• Organize for increased NIC costs in future payroll periods

• Re-examine share disposal plans in light of changes to CGT

• Consider training and recruitment prospects through government-funded initiatives (specifically in construction)

  
  

Although the Spring Statement may not have delivered as much as businesses had been hoping for, the long-term growth forecasts and management of inflation provide some basis for cautious optimism.

We expect more substantial tax and regulatory announcements from the Autumn Budget 2025. Sign up to the CCS Law newsletter or get in touch with us for tailored legal guidance.

If your business needs guidance on how today's news affects you, everything from employment law to tax planning and regulation compliance, our team is available to help.

Disclaimer: This article is intended for informational purposes only and does not constitute legal advice.

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