Tax & wealth planning tips for 2025 and beyond

Spring Statement summary

• No Major Tax Changes: The Spring Statement did not introduce any significant new taxes but emphasised ongoing measures to combat tax avoidance.
• Focus on Tax Avoidance: The Chancellor highlighted a continued focus on tax avoidance, with HMRC publishing consultations on various measures to enhance tax compliance.
• Tax Reliefs and Investments: The Government is reviewing tax reliefs such as the Enterprise Investment Scheme to boost retail investment and support growth.
• Simplification of Tax Systems: Upcoming measures aim to simplify tax and customs systems, reducing administrative burdens for businesses and individuals.
• Business Rates System: An interim report on the business rates system for England and Wales will be published in the summer, with further details expected in the Autumn Budget. Business rates are handled differently in Scotland and Northern Ireland, so it remains to be seen if those devolved Governments will follow suit in due course.
• Enhanced Compliance Measures: HMRC will be recruiting additional staff in addition to 5,000 previously announced in September 2024 to tackle non-compliance and collect outstanding tax liabilities. Also, HMRC is enhancing its compliance activities, by improving the quality of data received from the third-parties, action against non-compliant tax advisers, and better rewards for informants where the information leads to tackling serious non-compliance by large corporates, wealthy individuals, offshore and avoidance schemes.
• Making Tax Digital (MTD): The MTD timeline remains unchanged, after previous delays to introduction for self assessment, with phased implementation for different income thresholds starting from April 2026. At first, sole traders, landlords and the self employed with incomes over £50,000 will be required to submit their tax returns using compatible software and keep records digitally. As of April 2027, this will expand to incomes over £30,000, then £20,000 from April 2028. The final threshold was announced in the 2025 Spring Statement.
• Tax Debt Collection to be Expanded: HMRC’s debt collection activities are to be strengthened, with the Chancellor hoping to raise funds by chasing down unpaid taxes. As part of the plan, there will be greater use of third-party debt collection agencies. If cash flow becomes tight or creditors start to increase, seek the advice of the Azets Restructuring and Insolvency department to ensure all the options are explored as soon as possible and directors’ duties are adhered to.

Key actions to consider

• Review Tax Compliance: Ensure your business is compliant with VAT, PAYE, and Corporation Tax requirements to avoid penalties.
• Digital Record-Keeping: Where possible, transition to digital record-keeping systems to meet Making Tax Digital requirements and avoid late submission penalties.
• Mitigate National Insurance Increases: Manage the April 2025 rise in employer National Insurance rates and adjust payroll budgets accordingly through the use of salary sacrifice arrangements and employee benefits optimisation.
• Review Hiring Strategies: consider employment of apprentices and armed forces veterans, job sharing and flexible working, and outsourcing non-essential services.
• Evaluate Tax Reliefs: Take advantage of available tax reliefs such as the full expensing, the Annual Investment Allowance and research & development (R&D) tax credits.
• Succession Planning: Review and update succession plans in light of changes to Inheritance Tax and Business Property Relief from April 2026, with a particular focus on trust planning before the upcoming introduction of caps to the 100% relief rate.
• Property Investments: Reassess property investment strategies considering changes to Stamp Duty Land Tax (impacts those in England and Northern Ireland, Scotland and Wales operate different schemes) and the end of the Furnished Holiday Lettings regime.
• Protect Against Tax Investigations: A tax enquiry can be stressful, costly, lengthy and disruptive. Consider obtaining Azets Tax Investigation Service which covers potential costs from HMRC enquiries.
• Maximise Interest Deductions: For corporates, ensure that you have maximised your interest deductions. One consideration is the Corporate Interest Restriction rules. The de minimis £2m threshold has not increased for some time and with higher interest rates, many more businesses are seeing tax relief on their borrowing costs capped and this is a barrier to investment.
• Consider Gifting: Each year you can gift £3,000 free of inheritance tax (IHT). If you haven’t used the previous year’s amount, you can use that too. In addition, there is a small gifts exemption of up to £250 per person per year. There are also some specific exemptions for gifts made in consideration of marriage and other live events.
• Asset Transfers: While giving assets away is not necessarily your first call in tax planning, sharing income-producing assets between spouses is a legitimate way of reducing overall income tax liabilities. One of the benefits of being married is that spouses can generally transfer assets between themselves free of inheritance tax or capital gains tax (albeit there are exceptions, if the recipient spouse is non-domiciled or in certain circumstances relating to a divorce or separation).
• Check Your Will: We would always advise you to regularly review and update your Will as your family and financial circumstances change, and as tax legislation changes, as a way of ensuring succession and to manage your family’s IHT exposure. Consideration should also be given to setting up Lasting Powers of Attorney.
• Pension Planning: Effective and early pension planning is key to a financially secure retirement. At the heart of this planning is being aware of and taking full advantage of the available pension tax allowances for all the family. From 6 April 2027, pension funds, possibly including any unspent funds left in the scheme, will no longer be exempt from IHT when the scheme member dies. As such, making big (but not too big) pension contributions could be advantageous depending on your circumstances. Although pensions efficacy as legacy vehicles has reduced, they are still a great way to save tax efficiently for retirement. It’s important that individuals now review their planning and ultimately their drawdown strategies, as it’s more complex than previously.

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