The 2025 Spring Statement has arrived. But, in reality, it’s a relatively uneventful update with the Chancellor leaving taxes unchanged and instead focussing on government spending cuts. Some forecasts from the Office for Budget Responsibility (OBR) and the Office for National Statistics (ONS) may grab the headlines, but it’s crucial to approach their predictions with caution.

For those who are focused on long-term wealth-building, the sensible course of action is to tune out the short-term noise and stay focused on what you can control.

In this article, we’ll break down the key points from this update and outline proactive steps you can take to ensure your wealth is structured for success, no matter the temporary fluctuations in the economy.

Some key announcements:

Economic & fiscal outlook

• Inflation is expected to fall to 2% by 2027, averaging 3.2% this year.
• The UK’s budget deficit is forecast to shrink from £36.1bn (2025-26) to £9.9bn (2029-30).

Public spending & welfare

• £2 billion allocated to social and affordable housing.
• £3.4 billion cut to welfare spending.
• Defence spending to rise by £2.2 billion from existing reserves.

Personal finance & taxation

• High Income Child Benefit Charge (HICBC) will move to PAYE from Summer 2025.
• Pension Credit & State Pension triple lock increase by 4.1%.
• Inheritance Tax (IHT) receipts revised upward to £66.89bn by 2029-30.

Inheritance Tax (IHT): A growing concern that requires proactive planning

Perhaps one of the most significant, yet underreported, updates is the rising Inheritance Tax (IHT) burden:

• IHT is now expected to generate £66.89bn between 2024/25 and 2029/30, a £2.44bn increase from previous estimates.
• With no signs of reform, more families are being caught by IHT simply due to rising house prices and asset values.

This is a clear reminder that without proactive planning, more of your estate could end up going to HMRC rather than your loved ones. Steps such as:

• Utilising gift allowances to reduce taxable assets over time.
• Making use of trusts to protect and control how wealth is distributed.
• Ensuring pensions are structured efficiently, as they currently fall outside of your estate for IHT

It is, however, important to note that the last point on pension planning will change as of April 2027 and is a major driver of the expected increase in IHT receipts, along with changes to Business Relief and Agricultural relief.

If you haven’t reviewed your estate planning recently, now is the time to consider whether your wealth is structured efficiently for future generations.

ISA reform: Another example of short-term noise

One area of speculation leading up to the Spring Statement was the potential for Individual Savings Account (ISA) reform. In recent months, there was considerable noise around changes to Cash ISA contribution limits and tax rules, yet, ultimately, nothing happened.

This is a prime example of why reacting to speculation is rarely beneficial. Markets, commentators, and even policymakers generate noise, but financial success comes from tuning out distractions and trusting a well-structured plan.

This serves as yet another reminder that financial success isn’t about reacting to speculation, it’s about making the most of tax-efficient opportunities year after year. If you haven't reviewed your ISA and pension contributions recently, now is a good time to ensure you're maximising available allowances.

Growth forecasts: Why a globally diversified portfolio remains important

The OBR has revised its UK growth outlook for 2025 down from 2% to 1%. While this may dominate headlines, it’s essential to focus on the broader economic picture:

• Growth is still expected to remain steady beyond 2025, averaging 1.7%-1.8% per year through to 2029.
• The UK’s budget deficit is forecast to shrink from £36.1bn in 2025-26 to a £9.9bn surplus by 2029-30.

However, slower-than-expected growth has wider economic consequences, including weaker job creation, stagnant wages, and lower tax revenues, factors that can contribute to financial strain for businesses and households alike.

From an investment perspective, this highlights the risks of over-concentration in the UK market. Many UK residents not only earn their income domestically but also hold substantial assets in UK property and investments. This level of exposure can amplify risks during periods of economic stagnation.

A well-diversified, global portfolio helps mitigate these risks by spreading exposure across different regions and sectors. This strategic approach can reduce volatility, provides access to alternative growth opportunities, and help your wealth to remain resilient through economic shifts.

Financial planning should be guided by long-term objectives, not short-term market fluctuations. If recent economic developments have prompted concerns about your portfolio’s resilience, now is the time to review your investment strategy with a professional.

Household finances: Time to reassess your cash flow?

The chancellor has forecast a modest rise in disposable income, with an average increase of just 0.5% per year between 2025-26 and 2029-30. While this sounds positive, real financial security comes from personal planning, not government projections.

Questions to consider:

• Are you making the most of tax-efficient investment opportunities, such as ISAs and pensions?
• Does your income strategy align with your long-term financial goals?
• Are you prepared for the impact of inflation on your lifestyle?

Rather than letting a small rise in disposable income disappear into everyday spending, consider putting it to work through tax-efficient investments, debt reduction, or long-term savings.

Tax and spending: What it means for your financial plan

The chancellor confirmed there will be no new tax increases, offering a degree of stability for both businesses and individuals. However, a renewed crackdown on tax evasion is expected to generate an additional £1bn in revenue, highlighting the government’s intensified focus on compliance.

While key tax policy changes, such as national insurance (NI) adjustments and inheritance tax (IHT) revisions, were introduced in previous budgets, the impact of fiscal drag should not be overlooked. As wages rise and tax thresholds remain frozen, more individuals will find themselves in higher tax brackets, increasing their overall tax burden.

For business owners and high earners, this reinforces the importance of proactive tax planning. With frozen tax bands and stricter enforcement measures, ensuring your tax strategy remains both efficient and fully compliant is essential. With frozen tax bands and tougher enforcement, now is the time to ensure your tax strategy is both efficient and compliant.

The takeaway: Stay focused, review regularly, ignore the noise

The Spring Statement may have shifted the economic landscape slightly, but what hasn’t changed is the value of a well-crafted financial plan. Whether you’re worried about rising Inheritance Tax, bracing for inflation’s impact, or simply navigating the headlines, a clear, long-term strategy is your best defense.

Remember, good planning is timeless, and the most effective response to short-term economic changes is to stay focused on your personal goals.

Speak to Toby here to review your strategy, so you can move forward with peace of mind, knowing your plan is built to last.

Capital at risk. Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change. We do not provide tax advice. Any examples used in this article are for illustrative purposes only and you may get less back than the figures shown. This article does not constitute personal advice. We do not take any responsibility for third party websites and content we may link to from this article.

Issued on behalf of Nova. Nova is a trading name of Nova Wealth Ltd, which is authorised and regulated by the Financial Conduct Authority (FRN: 778951) and is a limited company registered in England & Wales (10739796).

References

-https://obr.uk/efo/economic-and-fiscal-outlook-march-2025/

-https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/inheritance-tax