How the UK’s 2025 Spring Budget Affects You and Your Business

Introduction:

The UK government has unveiled its latest Spring Budget, bringing a wave of changes that will impact individuals, employees, and business owners alike. From tax adjustments to pension increases, the budget introduces both opportunities and challenges. In this blog, we will break down the key points to help you understand how these changes might affect your finances.

Tax Changes: What You Need to Know

Will You Pay More in Taxes?

If you’re earning a higher income, you might soon find yourself paying more in taxes. The government is adjusting tax thresholds, which means around 500,000 more people will move into higher tax brackets. The overall tax burden is expected to rise to 37.7% of GDP by 2027, up from 36.3%.

However, there’s some stability too—income tax rates, National Insurance (NI) contributions for employees, and VAT remain unchanged.

National Insurance: What’s Changing?

Employers will now pay 15% NI on salaries above £5,000, up from 13.8% on salaries above £9,100.
The Employment Allowance—which helps small businesses offset their NI contributions—will increase from £5,000 to £10,500, offering some relief.

Capital Gains and Business Taxes

If you invest in shares, note that the basic capital gains tax rate is rising from 10% to 18%, while the higher rate is increasing from 20% to 24%.
Private equity managers will see their tax on successful deals rise from up to 28% to up to 32% from April.
The main corporation tax rate remains at 25% for businesses making profits over £250,000.
Rates on profits from selling additional property remain unchanged

Changes to Benefits, Pensions, and Inheritance Tax

Universal Credit payments will rise from £92 per week in 2025-26 to £106 per week by 2029-30.
Basic and new state pensions will increase by 4.1% next year due to the “triple lock” system, which benefits retirees more than working-age individuals.
The inheritance tax threshold freeze has been extended until 2030, and from 2027, unspent pension pots will be subject to inheritance tax. This could affect those hoping to pass their pensions on to loved ones.

Housing Market and Business Growth

Will There Be More Affordable Homes?

1.3 million new homes will be built thanks to relaxed planning rules. This could help first-time buyers in the long run, but housing affordability remains a concern.

Investment in Business and Automation

The government is injecting £3.25 billion into technology and automation, aiming to boost business efficiency. However, this could lead to job losses in some sectors as companies turn to AI and automation.

Workers and Employers: What’s Changing?

Minimum wage for over-21s will rise from £11.44 to £12.21 per hour from April.
For 18 to 20-year-olds, the minimum wage will increase from £8.60 to £10 per hour, as part of a long-term plan to unify wages under a “single adult rate.”
For 16 to 17-year-olds, the minimum wage will rise from £6.40 to £7.50 per hour.
Apprentices will see their minimum wage increase from £6.40 to £7.50 per hour.
Employers will need to manage higher NI costs, which could lead to job restructuring in some industries.

Tax Evasion: HMRC Cracks Down

To further support the fight against tax evasion, HMRC is receiving additional funding, to improve its efforts in detecting and combating illegal tax practices, totaling £100m . This move will increase the scrutiny on individuals and businesses trying to avoid taxes, so it’s important to ensure compliance with tax laws moving forward.

What Does This Mean for You?

The Spring Budget brings a mix of tax hikes, pension boosts, and business incentives. While some individuals may see small benefits, others—particularly those earning more or receiving government support—may feel the financial squeeze.

If you’re unsure how these changes will affect your personal or business finances, contact us today for tailored financial advice that keeps you ahead of the curve!