Spring Statement 2025: What the chancellor’s announcements mean for your money

28 Apr 2025

By Chancellor

After Rachel Reeves’ memorable first Budget in autumn 2024, you might have been concerned that the Spring Statement would bring about further impactful changes.

Fortunately, this year’s Spring Statement, delivered on 26 March 2025, did not usher in many new policies that are likely to affect you and your family directly.

That said, it did reveal that none of the changes made in the Autumn Budget would be reversed, as many people hoped.

Read on to discover a summary of the chancellor’s 2025 Spring Statement.

Personal tax thresholds and allowances remained untouched

Although the controversial Autumn Budget tax measures have remained in place, you may be relieved to read that in March, the chancellor did not levy any further taxes on the British public.

Here’s a breakdown of how your tax situation may look in the 2025/26 tax year.

Personal tax

Income Tax thresholds are frozen until April 2028. As a result, your Income Tax liability is likely to rise if your earnings increase within this time frame.

Similarly, the rates and thresholds for paying Capital Gains Tax (CGT) and Dividend Tax will remain the same.

Individual Savings Accounts (ISAs)

Before the Statement, rumours swirled, with many reports suggesting the chancellor would reduce the Cash ISA subscription limit to as little as £4,000.

Reassuringly, the tax-efficient ISA subscription limit will remain at its current level (£20,000) in the 2025/26 tax year (this applies across all adult ISAs, with a £4,000 limit placed on Lifetime ISA savings). The ISA contribution limit is frozen until 2030.

The additional Junior ISA (JISA) allowance will remain at £9,000 in 2025/26 too, giving you the opportunity to save and invest on behalf of a child. Remember, if your child has a child trust fund (CTF), you will need to first close this and transfer it into JISA if you want to open one.

Pensions

The pension Annual Allowance will remain at £60,000 for most earners in 2025/26. Your Annual Allowance may be lower if your income exceeds certain thresholds or you have already flexibly accessed your pension.

As usual, there was also speculation that the amount you could withdraw from your pension tax-free would be reduced. Fortunately, this did not materialise.

So, there remain ample pension investment opportunities for those who are approaching, or already in, retirement. Remember, if you are a higher- or additional-rate taxpayer, you can claim your marginal rate of tax relief on contributions within your Annual Allowance through self-assessment, as long as you are not paying as part of a net pay scheme or using salary sacrifice.

Talk to your adviser about making the most of tax efficiency within your pension.

State Pension

The chancellor did not announce any changes to the State Pension or the triple lock, which guarantees the State Pension will increase every tax year by the higher of inflation, average earnings growth, or 2.5%.

As a result, in the 2025/26 tax year, the full new State Pension pays a weekly income of £230.25. Remember that your State Pension payments may form part of your Income Tax liability.

High Income Child Benefit Charge reforms will come into place this year

The chancellor did not explicitly announce this next change when she stood up on 26 March. However, the government’s Spring Statement document revealed that those who pay the High Income Child Benefit Charge will be able to do so through PAYE from summer 2025.

As it stands, those who pay the charge need to register for self-assessment to do so, even if they do not otherwise need to self-assess. But this year, the government is making it easier for families to pay the charge without needing to submit a tax return.

Speak to your adviser about the High Income Child Benefit Charge changes if they might affect you.

The Office for Budget Responsibility has downgraded its 2025 growth forecast

Reeves announced that, after the economy declined in January, the Office for Budget Responsibility (OBR) reduced its 2025 forecast for UK growth from 2% in October 2024 to 1% as of March 2025.

She also mentioned the OBR’s long-term forecast, indicating that growth would increase for each year remaining in this parliament.

The chancellor also announced that, according to the OBR’s forecast, inflation will average:

3.2% in 2025
2.1% in 2026
2% (the Bank of England’s target rate) in 2027, 2028, and 2029.

Since the Statement was delivered, it was announced that the UK economy grew by 0.5% in February, signifying an unexpected step in the right direction. In more good news, the Office for National Statistics (ONS) says that inflation fell to 2.6% in the year to March 2025.

So, it’s important not to fall into a pessimistic outlook as things may be starting to improve, despite the OBR’s revision of its initial forecast for the year.

A reminder of the Autumn Budget changes that remain intact

In October 2024, the chancellor announced a series of tax-raising measures during the Autumn Budget, some of which could have affected your personal finances. These included:

Inheritance Tax (IHT) will be applied to unused pension benefits from April 2027.
CGT rates for non-property gains were raised in line with property rates with immediate effect, and Business Asset Disposal Relief and Investors’ Relief were both reduced.
Employer National Insurance contributions (NICs) rose on 6 April 2025, from 13.8% to 15%, and the threshold at which employers start paying NICs also fell.
Income Tax thresholds will remain frozen until 2028.
The IHT nil-rate bands will remain fixed until 2030.
VAT has been levied on fee-paying schools, effective from 1 January 2025.
Agricultural Property Relief and Business Property Relief will be reduced from April 2026.
The non-dom tax regime has now been abolished from 6 April 2025.
The Stamp Duty Land Tax surcharge on second home purchases rose from 3% to 5% from 31 October 2024.
Corporation Tax is now capped at 25% for the duration of the parliament.

While many hoped the chancellor would rescind these measures, all remain intact.

The key fiscal announcements from the 2025 Spring Statement

The chancellor’s speech largely revolved around changes to government spending and investment.

These are unlikely to affect you directly, but some of the key measures and announcements included in the Statement were to:

Increase defence spending to 2.5% of GDP by 2027, including providing an additional £2.2 billion to the Ministry of Defence next year
Rebalance payment levels in Universal Credit to incentivise people into work, and review the assessment for Personal Independence Payments, with the OBR stating these changes will save £4.8 billion from the welfare budget in 2029/30
Crack down on promoters of tax avoidance schemes, as initially announced in the Autumn Budget in October 2024
Invest £2 billion in social and affordable housing, so housebuilding reaches a 40-year high that helps put the government on track to reach its target of building 1.5 million homes by the end of this parliament
Introduce a £3.25 billion Transformation Fund to streamline public services using technology and Artificial Intelligence, making the government “leaner and more efficient”. Additionally, government departments will reduce their administrative budgets by 15% by the end of the decade.

While it is important to remain informed about issues that affect the UK’s financial landscape, try not to allow policy announcements like these to worry you. Your financial journey is personal to you, so what matters most is your plan and your family’s future.

Get in touch

Speak to a professional about any of the above measures or developments if you are concerned that they will affect you.

Email info@chancellorfinancial.co.uk, or call 01204 526 846 to speak to an adviser.

If you’re already a client here at Chancellor, contact your personal financial adviser to discuss any of the content you’ve read in this article.

Please note

All information is from the Spring Statement documents produced by the government.

The content of this Spring Statement summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

While we believe this interpretation to be correct, it cannot be guaranteed and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The Financial Conduct Authority does not regulate tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.