The Spring Statement

We’ve gotten used to a big government budget every Spring, usually including something you must act on, and then its little sibling in the Autumn, which is more of an ‘FYI’. This time it’s the other way around but there was still some news – and even positives – from the Chancellor’s speech on March 26. 

What happened? 

Chancellor of the Exchequer Rachel Reeves delivered her Spring statement to Parliament on 26 March. Officially, she’s responding to the Office of Budget Responsibility (OBR)’s spring forecast. 

 But practically, it’s a platform for a pretty beleaguered holder of one the great offices of state to reaffirm the government’s mission.  And she hit all the notes you might expect in her single-minded pursuit of growth, emphasising: 

•  the importance of securing “Britain’s future in a world that is changing before our eyes”. 
• that the government is “serious about taking the action needed to grow our economy”. 

And she claimed the biggest positive growth impact that the OBR have ever reflected in their forecast, for a policy with no fiscal cost. 

But there’s a blizzard of news coverage out there, so we sifted everything and present the main points. 

Implications for your money 

No-one was expecting drastically new personal finance news this Spring and that’s almost what we got. 

 You’ll have missed two relevant things if you only listened to the speech because it’s only in the full document. Firstly, there’s a change to domicile status. In their words, they “will remove the outdated concept of domicile status from the tax system and implement a new residence based 

regime from 6 April 2025. The new residence based regime will be more attractive to new arrivals than the current rules.” 

If we haven’t already spoken with you about this, drop us a line so we can discuss this further. 

Secondly, they promised to review individual savings accounts – ISAs – especially with regard to the balance of cash and equities. The government is clearly worried too many people are parking money in cash and not putting it to work in the economy.  

Well, there’s a wall of evidence that says long-term money will grow in equity markets at a far better long-term rate than in cash … where you’re likely to have your money eroded by inflation. We see where they’re coming from but must wait until they come out with firm recommendations. 

You probably know all the main things from last time. We may well have been advising you about them – not least because some of them come into force from the new tax year. These include raises in capital gains tax (CGT), inheritance tax (IHT) on pensions, the jump in business asset disposal relief, national insurance hikes. 

Tax matters 

Nothing else has changed in terms of the tax you pay. 

In other words, your capital gains tax rate is still going to be 24%, which you can still offset in the usual way. Business asset disposal relief will still go up to 14% from April 2025 and income tax bands remain frozen until April 2028.  

It is – if you’ll forgive the phrase – business as usual in terms of tax. Perhaps it’s because the Chancellor has bigger fish to fry … after all, the way the government is reforming welfare if a big enough fire for them to fight.  

But if they get it all right, if the global economy doesn’t go to hell in a handbasket, and if she gets enough tailwinds, Rachel Reeves could get the economic growth she so desperately wants for Britain. Those are some big ‘If’s. 

If you’ve been affected by any of the issues raised in the Spring statement, we’re here to talk on 020 7467 2700 or via hello@firstwealth.co.uk. 

This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.