How the Spring Statement 2025 Impacts SMEs and Startups

Are you an entrepreneur running your business in the United Kingdom and worrying about the recent Spring Statement by the chancellor? Well, you are not alone! Plenty of SMEs and startups are struggling to understand the impact of this spring statement. At first glance, the speech may seem like a high-level financial update, but behind the headlines lay some meaningful implications for you. So, let’s decode the same so that you can respond smartly.

A Renewed Focus on Growth and Productivity

The central message in this Spring Statement is economic growth. The focus is boosting GDP, supporting small businesses, and improving productivity. The Office for Budget Responsibility (OBR) forecasts growth to reach 1.9% in 2026. Also, the Government is investing significantly in capital infrastructure and skills development. This investment includes a £625 million construction skills package intending to create 60,000 skilled workers. So, if you run a construction business or something related to property or the supply chain, spending on infrastructure may bring new opportunities. For tech or innovation-driven startups, you may benefit from a broader push toward UK-based innovation and productivity improvement.

Full Expensing and Investment Confidence

While not announced in detail, the UK Government may continue its capital investment agenda. For SMEs, this means the continued availability of generous tax reliefs like full expensing, which can facilitate your business to go for a deduction of 100% of qualifying capital spent against your profits. Also, if you are considering upgrading your IT systems, equipment, or office space, do not delay. Upgrading can significantly reduce your corporation tax liability and improve long-term efficiency.

VAT Threshold and Administrative Burdens

One of the practical takeaways for small business owners is the adjustment to the VAT registration threshold. The threshold is increased to £90,000 for the first time in seven years. This change aims to reduce administrative pressure on micro-businesses and growing startups. So, if you are a startup nearing the previous £85,000 limit, this gives you more breathing room to grow without the added burden of VAT administration. This also presents a window to re-evaluate pricing strategies, especially if VAT compliance was previously a limiting factor.

Digital Tax: MTD Expands to More Businesses

The spring statement confirms the continued rollout of Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA), and sole traders and landlords whose annual income is over £20,000 will be required to comply soon. While the HMRC plans to consult further on how best to digitalise processes for those earning below that threshold, the Government remains committed to a modern digital tax system. Take this as a signal to start planning for digital compliance now. Cloud-based accounting software and digital record-keeping will soon become non-negotiable.

Crackdown on Late Payments and Tax Avoidance

The Government is taking a firm stance on improving tax compliance and reducing the tax gap, particularly from late payments and avoidance schemes. A package of reforms is expected to rise over £1 billion annually in additional tax revenue in the next few years. This means tighter enforcement against tax evasion, strengthening the power of HMRC against non-compliant tax advisers, and enhanced late-payment penalties for VAT and ITSA taxpayers joining MTD. No doubt, compliance expectations are rising. So, working with a knowledgeable accountant for small business and keeping your records transparent and up to date will be more important than ever.

Looking Ahead Towards Autumn Budget & Spending Review

While no new tax policies are introduced; the spring statement has set the stage for more changes. So, use this period to evaluate your financial and tax planning. Whether you are scaling up, seeking investment, or hiring, anticipate the upcoming announcements and stay agile. Although the Spring Statement 2025 is not headline-grabbing, the direction is clear that the Government is laying the groundwork to help businesses.

At CoreAdviz, we help SMEs and entrepreneurs like you stay ahead of change. If you are eager to understand how these updates affect your business, our accountant for small businesses is here to guide you.