Chancellor’s Spring Forecast 2025

Chancellor’s Spring Forecast 2025: What can we expect?

The new Spring Forecast isn’t meant to be a budget and Chancellor Rachel Reeves has previously stated she would only be looking to hold one major fiscal event per year. The Office of Budget Responsibility is still producing economic and fiscal forecasts for spring and autumn.

Therefore, you would think this would be a relatively quiet Spring Statement. However, there hasn’t been the growth in the economy the government predicted, so she may look to make some cuts.

She has already announced the scrapping of NHS England, so the government is looking to make savings there, and certain benefits are under major scrutiny. However, she is still under pressure to make further savings and drive growth, so the government could look at even more cuts to spending.

Commentators are calling on the government to provide support to the private sector to help drive growth. Could this be by incentivising businesses to invest by looking at reliefs, or by looking at other areas to help them do this?

Spring Forecast 2025 Predictions

Some predictions I expect to see from the Chancellor in the Spring Forecast 2025:

1. Employers’ National Insurance Contributions (NIC)

Employers’ NIC is increasing from April 2025 from 13.8 per cent to 15 per cent, which will hit businesses hard alongside the national minimum wage increase. Rachel Reeves isn’t expected to backtrack on this, as it is so close to the start of the new tax year. There is speculation she could look to announce help for the likes of charities in the Spring Statement with some form of relief or exemption. However, this hike does not help business, which in turn may hinder growth. Could she do more?

2. Income Tax Thresholds/Rates

We don’t predict there any changes here, and the Chancellor may look to freeze the thresholds for longer. They are currently frozen until 2028. By freezing them for a longer period, she will effectively bring more people into taxation, or tax them at higher rates if wages rise by inflation.

Could she also look at a wealth tax? This was speculated previously.

Also, the non-domicile IHT changes due come in from April 2025. Could she reform this more?

3. Capital Gains Tax (CGT)

Capital Gains Tax rates have been aligned so all assets are taxed at 18 per cent or 24 per cent. Business Asset Disposal Relief (BADR) relief rates are also being increased over the next two years from 10 per cent to 14 per cent then 18 per cent.

There was previous speculation the Chancellor may align CGT rates with income tax rates. Could she still look to do this in the Spring Forecast?

4. Inheritance Tax (IHT), Business Property Relief (BPR) and Agricultural Property Relief (APR)

Inheritance tax was the wildcard at the last budget and has affected a lot of people. Farmers have been the most vocal about it, however could the Chancellor attack it even further by altering other reliefs or exemptions in the Spring Statement? For example, she could make the seven-year PET rule longer, perhaps increasing it to 10 years.

Consultations have taken place and with the strong protests, would she consider reviewing the £1m limit that was brought in for BPR and APR?

Unused pensions are being brought into the IHT regime from April 2026, as announced at the budget last October. Once again there are consultations on the administration of this as it appears to be a problem area. Could this be refined more in the spring statement?

5. Cash ISA limits

There is speculation the Chancellor is going to change the cash limit for ISAs by reducing it from £20,000 to only £4,000.