With the Spring Statement just a week away, significant tax and financial changes could be on the horizon. From potential reforms to wealth transfers and inheritance tax to non-dom status, pensions, and VAT enforcement, tax partners at top 15 accountancy practice, HW Fisher, have shared what they are expecting to see, what financial advisers need to know—and why clients may need to act fast.
Commenting on the statement as a whole, Jamie Morrison, Head of Private Client team at HW Fisher says: “With Labour committed to keeping their main tax announcements in their Autumn Budgets, we’re not expecting any major tax changes in the upcoming Spring Statement. As the UK’s tax burden is already at a historic high, it is more likely that spending cuts and reform to public finances will take centre stage.”
Sharing their analysis on what might be on the Chancellor’s agenda, other tax experts at HW Fisher have commented as follows:
Wealth transfer via gifts – Simon Blum, Director
“ Many individuals are transferring wealth by gifting assets to the next generation with a view to reducing their Inheritance Tax exposure. In some cases, these transfers have been accelerated due to the changes announced by the Chancellor in her last Budget. There is speculation that Rachel Reeves might introduce a lifetime gifting allowance, which could require upfront taxation on gifts exceeding £325,000.
This would reintroduce a system that was in place many years ago, where large gifts above a certain threshold were taxed immediately. Under the current seven-year rule, gifts can be made Inheritance Tax free as long as the donor survives for seven years.
If you are considering a substantial lump sum gift to family members, it may be prudent to act before the Spring Statement, as these changes could take effect immediately.
Non-Domiciled Tax Regime – Sam Dewes, Partner
“Despite the Chancellor indicating at Davos that there could be some softening of the non-dom reforms (which are set to apply from 6 April onwards), further changes appear to be unlikely. The Chancellor has stated that inward investment to the UK is a central pillar of the Government’s growth strategy, so additional reform cannot be ruled out in the future to encourage use of the Transitional Repatriation Facility. We will be monitoring the Budget for any last-minute developments.”
Pension Reforms 2027 – Jamie Morrison, Head of Private Client team
“Significant uncertainty remains around the planned pension changes in 2027. Currently, there is little clarity on what these changes will entail, making it difficult for individuals to understand how their pensions will be impacted with the re-introduction of a charge to Inheritance Tax on the death of the beneficiary of the pension scheme. There is hope that the Spring Statement might provide more clarity to help individuals prepare ahead of official changes.”
VAT – Gerry Myton, Partner
“With the government seeking additional revenue, closing the VAT gap, which is now estimated at £9.5 billion for 2023/24, up from £8.1 billion in 2022/23, is likely to remain a priority.
It’s unlikely that much will be announced that hasn’t been already. We expect increased enforcement activity on businesses with VAT debts. We’re seeing greater use of the Insolvency process and Notices of Requirement to Provide Security and with the hiring of 5,000 additional HMRC officers, announced in August 2024, we will likely see a more aggressive and litigious HMRC.
The temporary 5p reduction in fuel duty may also remain in place to ease the burden on businesses, especially given the backdrop of the upcoming National Insurance increases and rising inflation.
Looking ahead, we would like to see various VAT reforms, such as:
- Reducing VAT to 10% for hospitality to support struggling sectors
- Increasing VAT on online saleswhile lowering it to 15% for in-town retail to revive high streets
- Restructuring VAT rates to incentivise healthy eating using the industry’s traffic light system which details sugar, fat and salt content.
- A reduction in the VAT registration threshold to £0 while reducing the standard VAT rate to 18-19%, a move that could bring more businesses into the system and help reduce the VAT gap.
