Spring 2025 Budget: What Small Business Owners Need to Know

The Spring Budget 2025 largely went unnoticed, as the government had already committed to keeping tax changes minimal ahead of the next general election.

But buried beneath the bigger political headlines were a few key points that small business owners, landlords, and the self-employed should absolutely be aware of.

The main one is that Making Tax Digital isn’t going away, in fact the government have now told us that sole traders and landlords with income/sales of £20,000 will be signed up in 2028.  Child Benefit changes are about to get a lot easier for higher earners. Here is our summary:

1. Making Tax Digital (MTD):

The timeline is shifting, again

The Spring Statement confirmed new dates and clarified some murky details around Making Tax Digital for Income Tax.  HMRC is serious about going digital, even if it’s taking longer than expected.

Here’s what’s new:

– If you’re self-employed or a landlord earning over £50,000, you’ll need to comply with MTD from April 2026.
– If you earn over £30,000, your start date is April 2027.
– New announcement: Those earning between £20,000 and £30,000 will now be expected to join the MTD club from April 2028.

Still no word on when partnerships or limited companies will be dragged into MTD for Corporation Tax. So if you fall into one of those categories, enjoy the calm while it lasts. Some people get a free pass as not everyone has to join.  The government has listed some exemptions (finally!).  These include:

– People with a Power of Attorney
– Non-UK entertainers and sportspeople (very niche, we know)
– Those who can’t access HMRC’s digital services (We have already been asked about this.  This is unlikely to be a broad brush. If you can use a smart phone our guess is that you won’t be exempt under this category)

A few specific groups will also be exempt for now, including:

– Ministers of religion
– Lloyd’s Underwriters
– People receiving Blind Person’s Allowance or Married Couple’s Allowance (Just a note: Married Couple’s Allowance is different from Marriage Allowance. One is for couples where at least one person was born before April 6, 1935. Yep, 1935. Not a typo.)

Final tax returns must go through software.  In an attempt to streamline things, your Final Declaration (aka the end-of-year tax return) must now be submitted via accounting software.  No more mixing and matching with the HMRC portal.  So if you’re using a spreadsheet and vibes to run your business, now might be a good time to look into MTD-compatible software.

2. MTD penalties are getting tougher (sorry)

If you’re late making your MTD payments, HMRC’s penalties are going up from April 2025.

Here’s what the new late payment fines look like:

– 15–29 days late: 3% of what you owe
– 30+ days late: 3% at day 15 + another 3% at day 30
– Ongoing: 10% per year on the unpaid amount

Basically, HMRC would like your money on time, please and thank you.  This applies to MTD for VAT and, in the near future, MTD for Income Tax too.  So if you’re not already in the habit of staying ahead, now’s the time to build it in.

3. High Income Child Benefit Charge: Easier reporting is coming

This one’s a win for parents with higher incomes.  From summer 2025, people who need to pay the High Income Child Benefit Charge will be able to do it directly through PAYE.  No need to register for Self Assessment just to pay that charge.  If you earn over £60,000 and receive Child Benefit (either for yourself, your partner, or for a child in your household), this could make life significantly simpler.  HMRC are calling it a simplification.  For once, we agree.

4. No changes to Employers’ National Insurance – it’s still happening

Anyone hoping the government might backtrack on National Insurance changes from the Autumn Budget… sorry, no dice.

From 6 April 2025:

– Employers will start paying NI on employee earnings over £5,000 (previously £9,100)
– Employer NI rate rises to 15% (up from 13.8%)
– Employment Allowance is increasing to £10,500
– The £100,000 cap for eligibility is being scrapped

So yes, costs are going up – but the Employment Allowance rise will soften the blow for some small businesses.

5. HMRC is getting more muscle (and a bit more cash)

HMRC is getting serious about chasing unpaid tax.  The Spring Budget includes:

– Hiring 1,100 new staff across compliance and debt collection
– Investing in automated debt recovery systems
– A new whistleblower reward scheme (think: tell on someone and earn a cut). The focus is on catching fraud, evasion, and ‘phoenix companies’ where directors shut down companies to ditch their tax debt and start fresh.

Expect tighter rules and more aggressive collection tactics.

Final thoughts

No headline-grabbing tax cuts or huge giveaways in Spring 2025, but some quiet but impactful changes are brewing, especially around Making Tax Digital and Child Benefit reporting.  If you’re self-employed, run a limited company, or rent out property, it’s worth paying attention.  These tweaks could affect your day-to-day admin and your cash flow in the near future.

Our top takeaways from this:

– Get MTD-ready sooner rather than later

– Talk to your accountant if you’re unsure how the new MTD rules will affect you

– Check if you qualify for High Income Child Benefit and prep for the PAYE update

– Budget for rising NI costs and penalties

– Keep records squeaky clean – HMRC’s eyes are everywhere

Need help figuring out how this all applies to you? We get weirdly excited about this stuff. Drop us a message and we’ll make it make sense.

Disclaimer: This blog is for general info only – not personal advice. Always speak to a qualified accountant about your individual situation.