This was not a full Budget. Chancellor Rachel Reeves reiterated her commitment to one major fiscal event annually, but it included significant policy shifts affecting public finances, welfare, and defence. 

Rachel Reeves has ruled out tax rises for now, but a number of tweaks and buried items in the Government’s documents suggest more could be on the horizon.

Below is a detailed breakdown of the key points and their implications for UK households and taxpayers.

Rachel Reeves downbeat economy

The Office for Budget Responsibility (OBR) revised its 2025 GDP growth forecast from 2% to 1%, citing global trade tensions, including new 25% US tariffs on cars and parts, and a slower domestic recovery. 

Inflation is projected at 2.8% in 2025, with the Bank of England maintaining interest rates at 4.5%. Longer-term forecasts show slight improvement, with growth rising to 1.9% in 2026 and averaging 1.7-1.8% through 2029. 

The OBR estimates real household disposable income could increase by £500 annually by 2029-30, compared to the previous government’s final Budget, assuming tax thresholds are adjusted.

Public sector net borrowing is expected to fall from £112 billion in 2025-26 to £58 billion by 2029-30, reflecting tighter fiscal control. 

However, the OBR notes this trajectory leaves limited room for economic shocks, with debt peaking at 96.8% of GDP in 2027-28 before declining slightly.

Fiscal discipline 

Rachel Reeves adhered to her fiscal rules: balancing day-to-day spending with revenue and managing debt levels. 

Without adjustments, the budget would have faced a £4.1 billion deficit by 2027-28. Instead, measures secure a £6 billion surplus in 2027-28, rising to £9.9 billion by 2029-30. 

This ‘headroom’ is narrow, with the OBR warning it could vanish if growth falters further or external pressures mount.

Welfare cuts

Welfare spending faced significant reductions. From April 2026, new claimants of health-related Universal Credit will receive £50 weekly instead of £97, with payments frozen until 2030. Under-22s will be ineligible for this element. 

Existing claimants retain £97 weekly until 2030, though a severe conditions top-up is planned. 

The standard Universal Credit allowance will rise from £92 to £106 weekly by 2029-30, a £14 increase over five years. These changes are projected to reduce welfare spending by £3.2 billion annually by 2029-30. 

Analysis suggests three million households could lose £1,720 yearly on average, pushing 250,000 people, including 50,000 children, into relative poverty. 

Reeves allocated £1 billion for employment support, aiming to offset cuts by boosting workforce participation.

Rachel Reeves leaves taxes unchanged, for now

No new tax rises were announced, aligning with Reeves’ pledge to avoid mid-year hikes. 

However, measures from the Autumn Budget persist: employer National Insurance rises from 13.8% to 15% in April 2025, and personal tax thresholds remain frozen until 2028-29. 

This fiscal drag will increase the tax burden, with revenue projected at 37.7% of GDP by 2029-30, a post-war high. 

Late payment penalties for self-assessment tax will double to 10% from April 2026, raising an estimated £200 million annually.

In the follow up documents from the Government on the Spring Statement, the Government confirmed it was making rules around late filing of self assessment tax returns harsher, with bigger penalties for late filing.

It also announced that parents who face paying the High Income Child Benefit Charge will no longer have to file a self assessment but instead will be able to use a digital service that repays their child benefit through PAYE. 

Finally, the Government announced it is looking at reforms to the ISA allowance and whether it can be better used to promote private investors and UK growth.

Ask our experts your money questions

Household impact

For households, the Spring Statement offers little immediate relief. Mortgage holders face sustained pressure with interest rates at 4.5% and renters see no respite from rising costs as welfare support tightens. 

The £500 projected rise in disposable income by 2029-30 hinges on future growth and tax adjustments, offering a distant prospect rather than immediate help. 

Low-income families, particularly those on benefits, will feel the welfare cuts most acutely, with the Resolution Foundation estimating a 2% drop in real income for the poorest fifth of households by 2027.

The 2025 Spring Statement prioritises fiscal stability over bold intervention, trimming welfare and boosting defence while holding the tax line. 

For UK households, it’s a lean outlook. Slower growth, tighter benefits and no quick fixes. 

Reeves is betting on long-term discipline paying off, but with global risks looming, the margin for error is slim.

Photo courtesy of HM Treasury Flickr

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Must know money focuses on the financial news you need to know. Here’s what scrapping inheritance tax (IHT) would mean for the richest people in Britain.

The wealthiest estates in Britain stand to gain around £1 million in tax savings if the Government abolishes inheritance tax, a new report from the Institute for Fiscal Studies has found.

The report comes on the back of the news over the weekend that Prime Minister Rishi Sunak is considering abolishing inheritance tax ahead of the next general election, due in December 2024 at the lastest.

However one of the report’s author David Sturrock points out that one in eight people in the UK will end up liable to pay the so-called ‘death duty’ when they or their partner dies by the tax year 2032-33.

Inheritance tax earns £7 billion for the UK Treasury each year currently and this is set to rise to £15 billion by 2032-33. Less than 4% of estates pay the duty.

Why abolish inheritance tax?

Inheritance tax is designed to take cut from people’s wealth when they die. At the moment through various bands and exemptions, for a married couple there is unlikely to be any tax obligation on wealth under £1 million, assuming their own home is factored into that wealth.

Inheritance tax is seen as ‘progressive’ politically as mainly affects the wealthier in society. But this has led to a major financial advice industry dedicated to avoiding paying.

People use advisers to ‘mitigate’ their liabilities and tweak the structure of their wealth to minimise how big the tax bill ultimately is.

Despite this, inheritance tax is widely considered the ‘most hated tax’ in Britain. the public routinely poll unfavourably toward the tax, no matter the understanding of who it impacts.

One of the biggest criticisms of the tax, aside from the cost, is that it targets families when they are grieving the loss of a loved one.

Another major gripe is the perceived unfairness of taxing hard-earned wealth that has already been subject to a myriad of other taxes such as income, dividend, capital gains, or stamp duty, over the holder’s lifetime.

Photo by Ron Lach

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For parents in the UK, childcare is often one of those inevitable but dreaded costs. Thankfully, there is some help available to many families in the UK to help with the expense.

Tax-free childcare is a Government scheme which replaced the former childcare voucher scheme, and is open to working parents of children 11 and under (or 17 and under for disabled children). 

How much could I get? 

The Government contributes 20% of childcare costs, capped at a maximum of £500 every three months or £2,000 per year, for each child. In other words, for every £8 you put into the tax-free childcare account, the government will top it up with £2 until the cap is reached. 

For children with a disability, this goes up to £1,000 every three months, up to a maximum of £4,000 a year. 

Am I eligible? 

There are a number of criteria to assess eligibility listed on the Government website. At a quick glance, to be eligible you must:  

• Be a British or Irish citizen, or have settled or pre-settled status 
• Be in employment (including self-employment) 

• Over a three month period, earn at least: 

• £1,098 if you’re under 18 or an apprentice 
• £1,557 if you’re aged 18 to 20 
• £2,117 if you’re aged 21 or 22 
• £2,167 if you’re aged 23 or over 

• Not be receiving working tax credit, child tax credit, universal credit, or using childcare vouchers from the previous scheme 

How do I access the funds? 

Via the Government website, you will first need to have or create a government gateway account, which will then allow you to open a childcare account. To open the childcare account, you will be asked a number of questions about yourself to verify your identity and assess your eligibility, including your national insurance number and employment status.

You will also be asked about your partner (if applicable), and information about the child or children you’re applying for will need to be provided. It is good to have all information to hand before starting the process as it does eventually time-out for security reasons. 

Once you have completed the application, you will be notified when your account is ready for use, assuming you are eligible. Please note, if you apply for tax-free childcare whilst on maternity, paternity or parental leave, you can only start using the account in the last 31 days of your leave. 

Do all childcare facilities accept this payment? 

Funding can be used for any approved childcare facility, which can include: 

• A registered childminder, nanny, play scheme, nursery or club 
• A registered school 
• Or a home care worker working for a registered home care agency 

Once your tax-free childcare account is opened, you will be able to check whether your preferred childcare provider accepts funding via this scheme. Alternatively, you can simply ask the provider ahead of time which type of funding they do or do not accept. 

Photo Credits: Pexels

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Mouthy Money is pleased to bring readers a new series of articles from Michael Taggart, one of the original founders of the blog.

Michael now runs a small business, MDTea, with his wife Helen and is going to be filling readers in on the trials and tribulations of what it is like to run a small business in the UK in 2023.

Expect laughs, tears, and even some mustachioed analogies as Michael bares his small business soul to the internet. Watch this space for more.

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From cryptocurrency being treated as a form of gambling to higher income tax rates and green mortgages – here are our favourite must know money stories this week to help you get your head around your personal finances.

Treat crypto investing as gambling, MPs say

MPs from the influential Treasury Select Committee have urged the UK Government to treat retail investment in cryptocurrencies as a form of gambling, report Chris Vallance and Tom Gerken for BBC News.

The committee’s report noted that about one in 10 people in the UK held crypto assets, and most said they are a “fun investment.” Gambling helpline charity GamCare said that in the last two years, it was approached by over 300 people struggling with investing in cryptocurrency.

While the Treasury agreed crypto value could dramatically change – closely resembling gambling – it did not support using gambling regulation.

The Treasury believes crypto offers opportunities, but said it was “robustly regulating the market, addressing the most pressing risks first in a way that promotes innovation.”

After identifying the potential risks and rewards of cryptocurrency, the committee recommended a balanced approach, while suggesting that the government should avoid any spending of public resources without a clear benefit.

One in five taxpayers to pay higher income tax

One in five taxpayers will be paying a higher-rate income tax by 2027, reports Ruth Emery for Money Week.

The Institute for Fiscal Studies (IFS) said the six-year freeze on thresholds and “fiscal drag” will push teachers, nurses, and electricians to the 40% tax bracket. 2.1 million more will be higher rate tax payers in five years, according to the Office for Budget Responsibility (OBR).

The report found in 2022–23, 11% (6.1 million) were paying the 40% tax rate, compared to the 3.5% of UK adults (1.6 million) in 1991-92.

Emery also outlines several tips to avoid the fiscal drag – using an ISA and pensions for tax relief, reducing your inheritance tax bill, taking advantage of the marriage allowance, or salary sacrifice if your salary has just tipped into a higher tax band.

The truth about ‘green’ mortgages

The UK Government is looking to hit net zero targets by 2050, and you might soon be forced to look into how ‘green’ your home is, writes Esther Shaw for The Telegraph.

According to the Office of National Statistics (ONS), the average UK property has an EPC (Energy Performance Certificate) rating of ‘D,’ and while it is not yet a law, all homes are expected to have an EPC rating of at least ‘C’ by 2050.

Some mortgage lenders are offering ‘green’ mortgages – to purchase energy efficient properties at slightly discounted rates – however, these aren’t quite appealing.

Nick Mendes of John Charcol, a mortgage broker, said: “While banks may be keen to talk about how they are doing their bit as eco-friendly lenders, rates tell a different story. Borrowers should not assume that opting for green will mean they get the best rate. Most market-leading deals will be on non-green products.”

However, some lenders offer alternative green perks including cashbacks, preferential rates, interest-free loans, or rate reductions.

Mr Mendes said: “You need to look at the other benefits of having an energy-efficient home. Not only will this mean lower utility bills, but it could also help when you come to sell, as a higher EPC rating could add value to your property.”

While EPC ratings are generalised and only measure a property’s energy costs, rather than its energy efficiency, for now at least it is the only way of gauging a property’s energy usage.

Photo Credits: Unsplash

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Mouthy Money Your Questions Answered panelist Sarah Coles answers a reader’s question about what they can do if they can’t afford to pay their tax bill. 

Question: I lost my job at the end of last year and now don’t have enough money to pay off my tax bill at the end of January. What can I do? 

Answer: If you’ve been putting off doing your self-assessment tax return because you can’t afford to pay your bill, the best approach is to consider it as two entirely separate things.

First, you need to do the paperwork, or you’ll face a penalty for missing the deadline of 31 January, and even if you can’t afford to cover your bill in time, there’s no need to fork out for admin delays.

If you can’t pay on time, and you don’t do anything about it, you’ll also pay a penalty – which will rise as time goes on. Don’t be tempted to ignore it, because it won’t go away, and the consequences will get worse.

If you’re not engaging with the taxman at all, they have the power to take some pretty drastic steps. They can pass the debt to a debt collection agency, take money direct from wages or benefits, take you to court, and even make you bankrupt.

If you live in England, Wales or Northern Ireland they can take money directly from your bank and take your belongings and sell them – which can add substantial costs to your debt.

However, if you do the tax return on time, and set up a payment plan, although you’ll pay interest on outstanding tax, there won’t be any more penalties or other horrible consequences.

These payment plans are officially called ‘time to pay arrangements’ and allow you pay in instalments.

You may be able to set one up simply online (on the HMRC website) as long as you owe less than £30,000, are within 60 days of the payment deadline, aim to pay the debt over the next 12 months, and don’t have any other payment plans or debts with HMRC. 

To do this, you’ll need your bank account details and your unique tax reference number (sometimes called a UTR). You will have been given this when you first registered as self-employed, and it will be on previous returns. You can also find it on your online HMRC account.

If you fall foul of any of these restrictions, it’s more complicated, but don’t let this put you off, because there’s still a very good chance you can sort something out.

You’ll need to call the self-assessment payment helpline on 0300 200 3822. They’ll take you through a more in-depth process, so you’ll need to prepare for the call.

They’ll start by checking you can’t pay in full, and they’ll ask if you can make a payment towards the total debt.

You’ll also need to give details about any other savings or investments, (excluding pensions) and will expect you to use this to cut your debt as much as possible. Then they’ll work out what you can afford each month.

You’ll be asked details about what you earn (including any income from pensions), how much you usually spend, and whether there are other taxes you need to pay.

The amount they’ll expect you to hand over is usually around half of what you have left over after you’ve covered all other outgoings including rent or mortgage payments, food, utility bills and any fixed outgoings.

The repayment schedule will be based on what you owe and what you can afford to repay – there’s no time limit on how long it can run for.  

Once the play is set up, you will be able to talk to HMRC and if you’re not happy with the repayment schedule, you can ask them to tweak it.

You can pay also make overpayments if you are able to and this will clear the debt faster.

The full process can be stressful, so it can help enormously to contact a debt charity like Stepchange or Citizens Advice. They should be able to help you understand your overall financial position, and deal with any other debts.

They can also go through the process of working out what debt repayments you can cover, which puts you in a better position when you contact HMRC. They’ll help you produce a ‘standard financial statement’, which the taxman will accept as proof of what you can afford.

However, don’t assume it’s definitely going to be a nightmare. In most cases if you follow all the steps you can set a repayment plan up quickly online, or with a slightly longer phone call to the tax office.

HMRC is aware of the cost-of-living crisis and how people are struggling and ultimately they want the tax to be paid, so there’s no point in putting it off or delaying getting it sorted.

Sarah is an analyst at Hargreaves Lansdown

Sarah has been an analyst with Hargreaves Lansdown for the past five years, after spending 14 years as a financial journalist writing for publications ranging from Bloomberg to AOL Money. Her areas of expertise include savings and financial planning – covering everything from tax to borrowing, spending and the housing market. She is also co-presenter of HL's ‘Switch Your Money On' podcast.

She is passionate about encouraging people to get to grips with every aspect of their finances, not because finance is inherently fascinating to everyone, but so they have enough money for the things that really matter to them in life.

Photo by rupixen.com on Unsplash

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Mouthy Money’s Your Questions Answered panellist Thomas Skinner, financial planning director and founder of Barnaby Cecil, answers a reader’s question on what to do with leftover Lifetime ISA after purchasing a house.

Question: We’ve recently bought a house and have leftover Lifetime ISAs with nothing in them. We’d like to save a small amount of money each month for retirement (both in our early 30s). Is it better to use our ISAs or contribute extra to our pensions?

I understand pensions are generous with relief, but won’t I just get hit with that tax when I come to use it later in life? The Lifetime ISA (LISA) seems attractive because there’s no tax implications in the future and it has a bonus which is better than tax relief.

Answer: Congratulations on the recent purchase of your property. The LISA and pension both have tax advantages and create an interesting set of options for savers. 

LISA investments are made from net income, after income tax has been paid, and receive a 25% bonus. The limit is £4,000 per annum (with £1,000 bonus applied) but, significantly, you cannot pay into a LISA after you turn 50.

And so, while they provide an attractive vehicle in which to save, your 50s could be the point in your career where you are able to make very substantial savings into your retirement. 

For that reason, pensions are still a very attractive vehicle. Particularly if you are a higher rate taxpayer and currently pay tax at 40-45%.

Or, if you earn above £100,000 and are caught by the loss of your personal allowance and wish to dip below this level, you could perhaps use a salary sacrifice scheme at work. This is because the payments receive tax relief when made and then benefit from tax-free growth. 

When you access your pension, which will be from 57 from 2028, you can draw 25% tax free, and the remaining amount is taxed at your marginal income rate at the time. Which could be a rate much lower than your current working tax rate.  

Seek independent financial advice before making any final decision but you could always consider using a combination of ISA, LISA and pension to create a portfolio of retirement accounts. Each has their own advantages and could create a flexible retirement solution. 

Thomas Skinner, financial planning director and founder of Barnaby Cecil

Have you got a burning money question? Ask your question here

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Mouthy Money’s Your Questions Answered panellist Natasha Heron answers a reader’s question on whether they will have a higher rate of tax on their rental property in Wales while living somewhere else.

rental property in Wales

Question: I own a home (paying the mortgage) in Wales which is currently being rented to tenants.

In 2023 my wife and I will look to buy a home together. We currently live in a flat which is owned by my wife’s sisters.

If we were to buy a property in Wales, would I be stung with a higher rate of tax because I already own a property which is being rented?

The new property will be my main residence and, preferably, I’d like to keep hold of the property I am letting out.

Answer: This is one of the main areas which causes confusion as the SDLT surcharge on second homes includes a special exemption when a purchaser is replacing their main residence.

The test is a two-tier approach.

Firstly, do you hold more than a £40,000 interest in any worldwide residential property? If yes, then you fall into the surcharge for second homes.

Next, we look at each buyer separately to see whether they qualify for an exemption. It is important to remember that each buyer must qualify and if one does not, they will ‘taint’ the entire purchase.

Secondly, have you (or are you) making a disposal of a main residence? The main residence exemption safeguards buyers who are simply selling their main residence to replace it with another to ensure they are not unfairly landed with the surcharge.

Usually, a main residence is sold in conjunction with purchasing a new one. However, the rules do permit for a main residence to be sold within three years of the purchase. This means the surcharge applies but it is refundable provided conditions are met.

If we use the two-step approach above, ask:

1. Do you own more than a £40k interest in a residential property? Yes, you have a BTL.

2. Main residence exemption:

a. Have you sold a main residence in the past three years?

b. Are you selling a main residence?

As you are married, we can consider whether you can rely on your wife’s situation. Unmarried, joint purchasers cannot rely on one another’s situation, but spouses and civil partners can.

If your wife has sold a main residence within three years preceding the purchase and she also lived in her property as a main residence in that time frame, you can potentially rely on her sale.

Assuming the answers to the above are “no”, the surcharge will apply to your new purchase.

Your only option to avoid the surcharge is to sell the BTL before purchasing your new property. If it is sold afterwards, you cannot reclaim the surcharge as you have not occupied the BTL as your main residence.

This is a tricky tax and you must seek advice at the earliest opportunity.

Natasha Heron is a tax manager at the accountants Hillier Hopkins, and host of the Tax Able With Tash podcast.

Photo by Thirdman

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More than one million households could miss out on the £150 energy rebate this April, experts have warned.

The rebate has been arranged by the Government in the face of the rising cost of energy bills, with the energy price cap set to rise by 54%.

Households need to have a council tax direct debit with their local council in order to receive the money in April instead of later this year.

This has raised concerns that around one million households that don’t pay their council tax via direct debit may face long waits to get the rebate.

A Department of Levelling Up, Housing and Communities spokesperson tells Mouthy Money: “Direct debit is the quickest and easiest way to pay council tax, and the best way for most people to get the rebate.

“Councils are responsible for making sure eligible households who don’t pay their council tax by direct debit receive the rebate and we have suggested a range of payment options for them to use.

“With the support of councils, we are confident that all those eligible for a rebate will receive their payments in good time.”

What financial support can you get?

Chancellor Rishi Sunak has allocated £9.1bn for a support package to households during the cost-of-living crisis by:

• £350 in October to help soften the blow of surging energy bills
• a one off £150 council tax rebate, available from next month for people living in bands A – D

However, to get the council tax rebate money in April you need to set up a direct debit with your council. Otherwise, families could be left waiting for months more.

Who gets the council tax rebate?

Households in council tax bands A to D in England will be paid £150 for the council tax rebate. This affects around 20 million homes, including 95% of rented properties. Find your council tax band on the government’s website here.

How do I claim the council tax rebate?

Eligible groups shouldn’t have to apply to receive the council tax rebate, if they’ve got a direct debit set up with the council for payments.

These people will receive the £150 payment from April, according to the Department for Levelling Up, Housing and Communities.

However, if you don’t have a direct debit set up, councils have urged households to do it as soon as possible. That way, you’d be able to get the money this April instead of waiting for it to arrive much later. You can switch to direct debit through this government portal here.

Have your bank or building society name and account, sort code and branch address at hand when setting up your direct debit.

If you don’t get that set up in time, it’s best to try and contact your local council to try and arrange for them to make payment to you by other means.

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Workers can claim up to £250 tax relief for working from home (WFH), towards a year for extra costs during the pandemic – our blog advises how, before it’s too late!

The tax relief existed before the pandemic and cost the Treasury about £2million a year since it was created in 2003.

But with the pandemic and working from home guidance in place, the cost has increased to £500 million a year for the Treasury.

Chancellor Rishi Sunak is looking to close the loophole as a result. But there is still time to claim if you haven’t already.

Can I ask for tax relief for WFH?

Yes, you can ask for task relief for extra costs such as electricity bills, internet and more when working from home. Fortunately, you still have more time before this loophole closes, as the termination date is not clear yet.

Over a year, you can claim up to £62.40 for basic-rate payers and £124.80 for higher earners. You can claim back up to two-years-worth, making the relief worth up to £250 depending on your income.

You can claim working from home tax relief if you have to work at home on a regular basis, either for all or part of the week. This includes if you have to work from home because of Covid.

The tax relief is designed to help with costs including:

• gas and electricity
• metered water
• business phone calls
• internet access

HMRC doesn’t take these specific costs into account when calculating how much you’ll get however. Instead, you will get the fixed amount depending on your income tax bracket.

Claimants are eligible for the full tax break even if they only ended up working at home for one day in the year, as the rules have been relaxed thanks to the pandemic.

According to HM Revenue & Customs, 4.9 million people have successfully claimed the tax break since March 2020.

How can I ask for working from home tax relief?

You can check if you can claim tax relief, on the government website. To claim these expenses, you’ll need to create or log into your Government Gateaway user ID.

You’ll need to present basic identity information such as passport, National Insurance number and pay slips in order to get the relief.

While there is no clear indication of when the tax relief will be scrapped, Sunak is delivering his Spring Statement on 23 March, when it would likely be announced if it’s going to happen. Often in that case changes will be applied at the end of the tax year on 5 April.

Photo by Jason Strull on Unsplash

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