Wednesday 26th March 2025 saw Chancellor Rachel Reeves step out with the red box once again to deliver an update on economic developments. With the Labour government deciding to hold one formal Budget per year each autumn, we expected yesterday’s statement to deliver more details on decisions already taken, rather than acting as a full-blown fiscal update.
So, did we receive the clarity we were hoping for in regard to umbrella regulation proposals, IR35 and Employers’ National Insurance Contributions (NICs) increases? Read our summary of key points below, alongside commentary from Director of Compliance Chris Bloor.
Spring Statement: Key Updates
Before we delve into what we expect to hear during the Spring Statement, we’ve listed below some of the main topics Well, it’s safe to say that we didn’t get any clarity in any of the aforementioned areas.
Disappointingly, there wasn’t any reversal of the Employers’ NIC increases, further guidance on IR35 or, perhaps more crucially, on the government’s proposals for tackling non-compliance in the umbrella industry.
What did we get?
The government reasserted its pledge to close the tax gap and ensure that businesses and individuals pay the right tax. To support this, they have announced measures to raise over £1billion in gross tax revenue and published further consultations covering:
- Enhancing HMRC’s use of third-party data for automation and closing the tax gap.
- Strengthening HMRC’s ability to act against tax advisers who facilitate client non-compliance.
- Implementing measures to target promoters of marketed tax avoidance schemes that result in unexpected tax bills for clients.
- Simplifying and strengthening HMRC’s penalties for inaccuracies and failure to notify.
To support these proposals, £100 million will be allocated over the next five years for HMRC to hire 500 more compliance staff, enhancing HMRC’s ability to enforce tax laws.
As part of the announcement of the planned increases to the defense budget, the chancellor stated that it was the government’s intention to make the UK a ‘Defense Industrial Superpower’. Plans were confirmed for the towns of Barrow and Plymouth, both of which are heavily reliant on an agile contractor workforce.
The chancellor appeared proud to confirm that the OBR (Office for Budget Responsibility) had confirmed that the government’s house building reforms will ‘lead to a forty-year high’ and once again committed to building 1.5 million homes by the end of the current parliamentary period. It was announced that the government will provide up to £600million to train up to 60,000 more construction workers.
Wider announcements included:
- Growth forecast: The OBR has cut growth forecasts for 2025 from 2% to 1%.
- Capital spending increase: An increase of £2billion a year relative to the plans set out in the autumn is expected.
- Inflation: Forecast to be 3.2% in 2025 (up from 2.6% forecast in October) and falling to 2.1% in 2026, returning to the Bank of England’s 2% target from 2027.
What does this mean?
Chris laments, “It was disappointing not to receive an update on the proposed umbrella regulations. However, today’s announcement relating to closing the tax gap clearly illustrates that HMRC will be given more information and resources to enforce compliance.
Perhaps it was a bit optimistic to think that the Employers’ NIC increases would be reversed, however, for those businesses that have yet to start preparing, I would suggest referring to our Navigating Legislation Changes document.”
Chris adds: “The prioritisation on defense and housebuilding measures does provide some positivity as both industries rely heavily on the agile workforce, however, it will be essential to ensure these proposed measures for growth also take into consideration their intentions with regards to guaranteed hours of agency workers and the proposed umbrella regulations.”
Conclusion
We wanted to take this opportunity to reassure our employees that we’re here to provide support and guide you through any changes in legislation. If you need further clarification on how exactly these latest announcements will affect you going forward, don’t hesitate to get in touch with our team.
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