Spring Statement 2025

Last Wednesday, Chancellor of the Exchequer Rachel Reeves delivered details of the Spring Statement, committing to the promise of no major tax announcements.

While the Spring Statement didn’t have too many changes that will affect the self-employed, there are still some key areas that are worth being aware of.

Here, we take a look at what you need to know:

Employers’ National Insurance Contributions

A rise in employers’ National Insurance was announced during the Autumn Budget and was met with criticism for not only having a negative impact on employers, but the umbrella sector too.

In fact, it was a move that was described as a ‘hammer blow’ for umbrella company contractors.

Unfortunately, the government has not made a U-turn on this decision, and so, from the 6^th of April 2025, the employer rate will increase from 13.8% to 15%.

National Living Wage

From the 1^st of April 2025, there will be an increase to the National Living Wage and National Minimum Wage rates:

• National Living Wage – £12.21
• 18-20 – £10.00
• 16-17 – £7.55
• Apprentices – £7.55

The plan is to eventually create a single adult wage rate.

Personal Allowance

The Income Tax personal allowance remains at the current level of £12,570 and will remain so until April 2028 – it has been suggested that after this date, it will be uprated to keep in line with inflation

Tackling non-compliant tax advisors/tax avoidance schemes

The government will be targeting non-compliant tax advisors who promote aggressive tax avoidance schemes by bringing in an additional 500 HMRC compliance officers and tougher penalties.

Umbrella company contractors need to stay vigilant and ensure they’re using a compliant company.

For more guidance on this, take a look at our Is it safe to contract through an umbrella company? page.

There will be four new consultations for targeting tax avoidance schemes:

1. Utilising Third-Party Data. A consultation on modernising HMRC’s acquisition and use of third-party data to help taxpayers get their taxes right the first time.
2. Behavioural Penalty Reform. A consultation on simplifying and strengthening penalties for inaccuracies and failure to notify.
3. Tackling Non-Compliant Tax Advisers. Enhancing HMRC’s powers to take swift action against tax advisers facilitating non-compliance.
4. Closing in on Tax Avoidance Promoters. Measures to target promoters of marketed tax avoidance.

Making Tax Digital (MTD)

Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) means having to keep digital records and submit quarterly tax returns using HMRC-approved software.

This is will soon include a wider range of smaller sized businesses, and while this won’t affect umbrella company contractors, other self-employed individuals and landlords earning a certain amount of income will be impacted.

The year that this becomes mandatory will depend on earnings, for example:

• April 2026 – self-employed individuals and landlords earning more than £50,000
• April 2027 – those earning more than £30,000
• April 2028 – those earning more than £20,000

We hope you have found this page useful. Our team of experts are available to answer any queries you may have, so drop us a line on 01206 591 000 or email sophie.lewis@contractorumbrella.com.