Rather than introducing a raft of additional tax measures the Chancellors’ Spring Statement focused instead on tightening public spending with anticipated changes to welfare spending as the main focus along with changes to tax administration. She acknowledged that the current economic climate is increasingly uncertain, referring to the 2nd April when Donald Trump will reveal his “reciprocal” tariffs.
Personal Independence Payment (PIP) reform
From November 2026 for new claimants, and for existing claimants at their next award review following that date, a tougher qualification basis will apply. Claimants will need to score a minimum of four points in at least one activity to qualify for a daily living award. This change, alongside increased capacity for processing award reviews from April 2026, is projected to produce savings of over £4.5 billion by 2029/30.
Abandonment of Work Capability Assessment changes
The descriptor reforms to the Work Capability Assessment (WCA) announced at Autumn Statement 2023 that were due to take effect this year will be cancelled, at a cost of £1,645 million in 2029/30. From April 2026 WCA assessments will restart, generating savings of £355 million by 2029/30.
Freezing the Universal Credit Health Element (UCHE)
From 2026/27, the award rate of UCHE will be frozen for existing claimants and new claimants will receive a lower award of £50 a week, also frozen. This freeze will last through to 2029/30 and generate £3 billion of savings in that year.
Universal Credit Standard Allowance: increase above inflation
In parallel with the changes to the Health Element, the Standard Allowance for Universal Credit will be uplifted above inflation for new and existing claimants, reaching CPI + 5% by April 2029. The cost of this will be nearly £1.9 billion by 2029/30.
Welfare fraud and error
Increased checks on potential Universal Credit claimants and the recruitment of 500 more fraud and error staff are together projected to produce £240 million of savings by 2029/30.
Tax debt collection
Additional funding will be provided to increase HMRC debt management capacity by expanding the use of third-party debt collection agencies. In addition, HMRC will recruit an extra 500 compliance staff, starting in April 2025 and 600 more debt management staff, starting in April 2026. Together these moves are projected to raise an extra £810 million by 2029/30.
Increase in late payment penalties
Late payment penalties for VAT and Making Tax Digital (MTD) for income tax self assessment (ITSA) will increase from April 2025. The new rates will be:
• 3% of the tax outstanding where tax is overdue by 15 days; plus
• 3% where tax is overdue by 30 days; plus
• 10% per annum where tax is overdue by 31 days or more.
The higher penalties are projected to raise £125 million by 2029/30.
Expanded rollout of Making Tax Digital for income tax self assessment
From April 2028, Making Tax Digital for Income Tax Self Assessment will apply to taxpayers with trading or property income over £20,000. The threshold from April 2026 is £50,000. This is projected to generate £120 million in 2029/30.
High Income Child Benefit Charge (HICBC)
From summer 2025, Child Benefit claimants (or their partners) who are employed and newly liable for HICBC will be able to pay the tax charge through Pay As You Earn (PAYE) without being required to submit a self assessment tax return.
Options for reforms of Individual Savings Accounts “that get the balance right between cash and equities to earn better returns for savers” are being examined by the Treasury.
A range of Home Office fees will rise from 9 April 2025, including fees for Electronic Travel Authorisation (ETA), visas, sponsorship, immigration, nationality and passports. The level of increases ranges from 5% for some visas to 120% for Certificates of Sponsorship. These increases are projected to produce £400 million of additional income by 2029/30.
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