UK Spring Statement 2025
28 March 2025| CATEGORIES: HMRC, HMRC consultation, Spring Statement 2025, Tax, tax compliance| TAGS: penalty regime, public consultations, Spring Statement, tax avoidance, tax measures
The UK chancellor, Rachel Reeves, delivered her Spring Statement this week.
While no tax rises were announced, details of a number of key tax related measures and new consultations were published in the accompanying documentation.
The main VAT related announcements include:
Increasing late payment penalties percentage rate
HMRC will increase the existing late payment penalties. These changes will affect VAT payments, as well as Income Tax Self Assessment (ITSA) taxpayers as they join MTD.
From 1 April 2025, if taxpayers pay late, they will be charged 3% at day 15 and another 3% at day 30 and then 10% per annum from day 31. This is an increase from 2% at 15 days, 2% at 30 days and 4% per annum from day 31.
The penalty increases are designed to encourage payment, penalise those who don’t pay on time and encourage those in genuine difficulty to contact HMRC and make Time to Pay arrangements. Those that have engaged with HMRC and entered a Time to Pay arrangement will not be charged penalties.
Encouraging the use of Direct Debit to pay PAYE and VAT
HMRC is encouraging businesses to use Direct Debit to pay PAYE and VAT. This payment method makes it easier for businesses to pay what they owe on time and reduces late payments. Payment by Direct Debit can also reduce debt, errors and misallocations from incorrect references.
GOV.UK guidance has been updated on how to:
Consultation on the reform of behavioural penalties
A consultation has been launched on the reform of behavioural penalties for inaccuracies and failure to notify HMRC of tax due. Views are being sought on options to simplify and strengthen the penalty regime.
The consultation considers two possible approaches:
- Reforming the existing framework: this approach would retain key aspects of the existing penalty system but simplify how penalties are calculated and applied. This could involve reducing the number of penalty categories, standardising how behaviour is assessed, and making the rules clearer and easier to follow.
- Exploring an alternative model: this approach considers a more fundamental redesign of penalties to improve clarity and consistency. It looks at whether a different structure could better achieve fairness, compliance, and deterrence while reducing complexity for taxpayers, agents, and HMRC.
The proposed alternative model consists of two features: a misdeclaration/failure to notify penalty and a civil evasion penalty. This would aim to provide a clear division between the penalty charged for the inaccuracy or failure to notify itself (the misdeclaration penalty, which would form the majority of cases), and a tougher sanction reserved for the more serious cases of deliberate non-compliance (the civil evasion penalty).
Responses to the consultation should be submitted by 18 June 2025.
Consultation on raising standards in the tax advice market
The government has published a consultation to explore options to strengthen HMRC’s ability to take swifter and stronger action against professional tax advisers who contribute to non-compliance in their client’s tax affairs.
The consultation runs from 26 March 2025 to 7 May 2025, and seeks views on a suite of potential future changes, including:
- expanding information powers against tax advisers.
- introducing stronger penalties against tax advisers who contribute to the tax gap.
- publishing details of tax advisers subject to HMRC sanctions.
- sharing a greater range of information about tax advisers with their professional bodies.
Consultation on closing in on promoters of marketed tax avoidance
The government has published a consultation seeking views on a range of new measures to close in on promoters of tax avoidance. These include proposals that would give HMRC additional powers and stronger sanctions.
The proposals cover four areas:
- expanding the scope of the Disclosure of Tax Avoidance Schemes (DOTAS) regime.
- introducing a Universal Stop Notice and Promoter Action Notice.
- tackling controlling minds and those behind the promotion of avoidance schemes through new highly targeted obligations and stronger information powers.
- exploring options to tackle legal professionals designing or contributing to the promotion of avoidance schemes.
The consultation includes several proposals for the introduction of new criminal offences targeted at anti-avoidance measures.
The consultation period runs to 18 June 2025.
Consultation on the introduction of advance tax certainty for major investment projects
The government has published a consultation that proposes the introduction of a voluntary route for corporate entities who undertake major investment projects to seek advance certainty over how the tax rules will be applied to the project if it proceeds as outlined in the clearance.
It is proposed that a new dedicated service be introduced that is tailored to the very largest and most innovative investment projects, given their scale, complexity and range of tax implications. The consultation proposes that corporation tax will be the core tax on which investors can seek advance certainty, but the government is open to exploring the case for expanding the process to other taxes, including VAT.
The consultation runs until 17 June 2025.
Information on all the Spring Statement measures announced can be found in the Spring Statement 2025 page on GOV.UK.