2025 Spring Statement

Chancellor Rachel Reeves has recently delivered a Spring Statement introducing some important updates for the self-employed and small businesses.

Increase in Employer National Insurance Contributions (NICs)

Effective 6 April 2025, employer NICs will rise from 13.8% to 15%, the threshold at which employers begin paying NI will drop from £9,100 to £5,000. 

To help small businesses offset the increased NIC costs, the Employment Allowance, which helps eligible employers reduce their NIC liability, will increase from £5,000 to £10,500, and the £100,000 eligibility threshold will be removed.

Minimum wage increase

From 1 April 2025, the National Living Wage rate will increase to £12.21 for employees aged 21 and above.

At the same time, the National Minimum Wage rate will increase to:

• £10 for employees aged 18-20
• £7.55 for employees who are under 18
• £7.55 for apprentices.

Late Payment Tax Penalties

Starting April 2025 penalties for late filing of self-assessment tax and VAT returns will increase. Current penalties of 2-4% will rise to 3-10%,

• 3% charge if overdue by 15 days
• Additional 3% if overdue by 30 days
• 10% annual interest for payments 31+ days late

Making Tax Digital (MTD) Expansion for Income Tax

The Spring Statement reinforced HMRC's commitment to digitalisation. From April 2026, Making Tax Digital for Income Tax Self-Assessment (ITSA) becomes mandatory and will be introduced in two phases:

• from April 2026, for those with qualifying income over £50,000
• from April 2027, for those with qualifying income over £30,000

(MTD for ITSA) requires businesses and landlords with qualifying income to maintain digital records and update HMRC each quarter using compatible software. Gov.uk Making Tax Digital for Income Tax Self-Assessment.

Sage: Spring Statement 2025.