The Spring Statement is just around the corner and speculation has already begun about what will be announced. From tax increases to a clampdown on umbrella company regulations, the new government’s first budget back in October 2024 brought with it lots of change. With the main fiscal updates and changes happening each autumn, the Spring Statement is expected to act as an update into economic developments and decisions already taken, rather than a full-blown budget.
As Wednesday 26th March 2025 approaches, we at Parasol thought now would be a good time to look at potential topics that may be covered. Chris Bloor, Director of Compliance, gives some insight on what we can expect to hear as well as what he hopes we’ll get further clarification on.
Autumn Budget 2024 Recap
Before we delve into what we expect to hear during the Spring Statement, we’ve listed below some of the main topics covered in the Autumn Budget:
- Employer’s National Insurance Contributions (ENICs): The rate will increase from 13.8% to 15%.
- Employer’s NI Threshold: Reduced from £175 to £96.15 per week, impacting employer costs significantly.
- National Minimum Wage: For employees aged 21 and over, the minimum wage will rise from £11.44 to £12.21 per hour.
The above changes will come into effect in April 2025. You can find a more detailed summary in our Budget Day blog here.
Spring Statement 2025
So, what can we expect come March 26th? Chris Bloor breaks down some key areas he hopes will be addressed.
Clarity on Umbrella Regulation proposals
Chris says, “In the autumn budget, we heard the chancellor announce the government’s intention to tackle non-compliance in the umbrella industry. Despite releasing their proposals, the industry still requires more detail and, given that these measures are due to come into force in April 2026, it would be really useful if that further detail was provided as part of the upcoming statement.”
“It’s unlikely we’ll hear anything on this, but it would be pleasant surprise as it would give the industry more time to prepare. The previous government did provide an update on Tax Administration Day last year (held on April 18th 2024), however, I suspect we will need to wait until early summer for the draft legislation.”
Employers’ National Insurance Contributions (NICs) increases
On this point, Chris says, “The announcement on the increase in overall percentage and reduction in thresholds was a major blow for all employers in the UK and we have started to see some employers taking steps to reduce their workforce or scale back on recruitment ahead of the rise in employment costs. Given the government’s main objective is to achieve growth, it could be argued that they need to go back to the drawing board on this one.”
In terms of the likelihood of the government rethinking the employers’ NICs increase, Chris isn’t too hopeful: “Unfortunately, it is extremely unlikely that these changes will be reversed, though the government may look to provide industry targeted assistance to try and reduce the overall impact.”
IR35
Could IR35 be back on the table? Chris says, “The impact of Off-Payroll changes in April 2021 is still creating headaches for hirers and contractors alike. Perhaps the government will look to provide some much need clarity to allow businesses to safely engage with contractors and benefit from the agility that they can provide.”
Chris added, “The plans to introduce a single worker status would have been a positive step, however, given this proposal looks to have been kicked into the long grass for now, it seems unlikely that we will get any announcement. HMRC’s recent announcement on changing the criteria on the small business exemption for IR35, and the proposals for day one rights and guaranteed hours for agency workers (both to take effect in 2026) could persuade businesses to take a fresh approach to engaging with genuine contractors.”
Final Thoughts
We’ll be keeping a close eye on changes made during the Spring Statement that affect agencies and agency workers, so be sure to check back in on our blog page after March 26th for our round-up of the all-important announcements.
In the meantime, feel free to get in touch with one of our team if you have any questions or concerns regarding something mentioned in this blog.
