On Wednesday 26 March 2025, the Chancellor of the Exchequer, the Rt. Hon Rachel Reeves, delivered her Spring Statement. As the Chancellor had promised in the autumn, today's tax statement did not contain any tax increases. She did however accompany the Spring Statement with several consultations in different areas of tax, which we briefly discuss below. As a reminder, we have outlined below previously announced key tax changes which will take effect from April 2025, with relevant commentary on the Scottish perspective where applicable.

1. Consultations and Policy Papers

While this Spring Statement does not contain any substantive tax measures, the Chancellor has announced the following consultations and policy papers on key tax matters to inform government decisions on future tax legislation. These consultations apply equally in Scotland.

Consultations

Advance tax certainty for major projects

This consultation seeks views on a dedicated service, tailored to the largest and most innovative investment projects, and which provides statutory certainty over how tax rules will be applied to these projects. This should enable the projects involved to more precisely estimate the impact of tax on their rate of return and so invest more confidently. This consultation will run for 12 weeks and will close on 17 June 2025.

R&D tax relief advance clearances

This consultation seeks views on a system of advance clearances for the Research and Development (R&D) tax reliefs, with the aims of reducing error and fraud and increasing certainty for businesses. The consultation will run from 26 March 2025 to 26 May 2025, after which time the government will announce its preferred approach later in the year.

Better use of new and improved third-party data to make it easier to pay the correct tax first time

This consultation explores the opportunities for improving the quality of data acquired from third parties for tax administration. The new and improved data will be used to help taxpayers get their tax right the first time, while closing the tax gap. The consultation will run from 26 March 2025 to 21 May 2025.

Behavioural penalties reform

This consultation seeks views on options to reform the framework for financial penalties that apply when inaccuracies are found in returns and documents submitted to HMRC, and where taxpayers do not meet their obligations to notify HMRC of circumstances that affect their tax liability. The consultation will run for 12 weeks from 26 March to 18 June 2025.

Tackling tax evasion

Today's announcements also mark a further commitment from the Chancellor to address tax evasion. To that end the Chancellor has announced:

• a consultation on the enhancement of HMRC's powers to tackle tax advisers facilitating non-compliance. This consultation discusses options for HMRC sanctions, to take swifter and stronger action against professional tax advisers who facilitate non-compliance in their clients' tax affairs, or whose actions contribute to harming the tax system. This consultation will run from 26 March 2025 to 7 May 2025; and
• a consultation seeking views on a range of new measures to deal with promoters of tax avoidance. The consultation runs from 26 March 2025 to 18 June 2025.

Policy Papers

Tax implications for companies and employees in relation to employees trading their shares on Private Intermittent Securities and Capital Exchange System (PISCES) 

PISCES is a new type of secondary trading platform that will allow for the intermittent trading of private company shares. Following responses from a consultation which was published in March 2024, the government intends to lay a statutory instrument before Parliament in May 2025, which will provide the legal framework for PISCES. The PISCES framework is intended to interact with two tax-advantaged share schemes: Enterprise Management Incentives and Company Share Option Plans, as well as employment-related securities in general, and sets out the income tax, national insurance contributions, and capital gains tax (CGT) implications for employees trading their shares on PISCES.

PISCES transactions will be exempt from Stamp Duty and Stamp Duty Reserve Tax and a consultation on the draft statutory instrument introducing these exemptions will run from 26 March 2025 to 23 April 2025.

Modernising the tax system through Making Tax Digital (MTD)

Previously rolled out in 2022 in respect of VAT, MTD will now be rolled out in respect of Income Tax. The MTD framework for Income Tax applies from April 2026 for sole traders and landlords with qualifying income over £50,000 and extends to those with incomes over £30,000 from April 2027, and those with income over £20,000 from April 2028. HMRC will continue to engage stakeholders on these changes before legislation is introduced before April 2026.

2. Key tax changes from April 2025

As a reminder, a number of key tax changes are set to take effect from April 2025, as previously reported in our Autumn Budget communique:

• Employer Class 1 National Insurance Contributions (NICs) increase from 13.8% to 15% from 6 April 2025. The salary threshold at which employers become liable to begin paying Class 1 NICs will drop from £9,100 to £5,000.
• The rate of CGT that applies to Business Asset Disposal Relief and Investors’ Relief will increase from 10% to 14% for disposals made on or after 6 April 2025, and the basic (18%) and higher (28%) rates of CGT on carried interest will be increased to a single unified rate of 32% from 6 April 2025.
• The National Minimum Wage (NMW) and National Living Wage (NLW) will increase on 1 April 2025. The NLW applies to employees aged 21 and over. The current rate is £11.44 per hour, this will increase to £12.21 (a 6.7% increase).
• Employees aged between 16 and 20 are to receive at least NMW. For employees aged 18-20 the NMW is currently £8.60 but will rise to £10 per hour (a 16% increase).
• Though not mentioned in the Autumn Budget nor the Spring Statement, we want to flag that HMRC has raised the 'actual official rate' for beneficial loan arrangements from 2.25% to 3.75%, effective from 6 April 2025.

All of these changes will apply equally in Scotland.

3. Non-UK domiciled individuals from April 2025

The remittance basis of taxation, which is based on domicile status, will be replaced with a new tax regime based on residence from 6 April 2025. Again, these changes will apply equally in Scotland.

The key changes include:

• 4-Year Foreign Income and Gains (FIG) Regime: New UK tax residents will receive 100% relief on foreign income and gains for their first four years, provided they have not been UK tax resident in any of the previous 10 consecutive years prior to their arrival. Anyone who previously used the remittance basis and is not eligible for the four-year FIG regime will pay tax on any new arising FIG at the same rate as other UK resident individuals.
• Temporary Repatriation Facility (TRF): Individuals who previously claimed the remittance basis can designate and remit foreign income and gains (including unattributed foreign income and gains held within trust structures) that arose prior to the changes at a reduced rate. The TRF will be available for three tax years from 2025 to 2028, with rates of 12% for the first two years and 15% in the final tax year of operation.
• Reforming Overseas Workday Relief (OWR): OWR will now align with the four-year FIG regime therefore it will no longer be necessary to keep foreign employment income offshore and in an offshore bank account to benefit from relief. From 6 April 2025, OWR will be subject to a financial limit on the amount of relief that can be claimed. This is the lower of £300,000 or 30% of an individual’s total employment income.
• Residential based inheritance tax (IHT) system: The current domicile-based system of IHT will be replaced from 6 April 2025 with a new residence-based system. This will affect the scope of non-UK property brought into UK IHT for individuals and trusts. An individual is long-term resident (and in scope for IHT on their non-UK assets) when they have been resident in the UK for at least 10 out of the last 20 tax years and then remain in scope for between three and 10 years after leaving the UK. IHT will be charged on non-UK assets owned outright and those comprised in a settlement when an individual/settlor is long-term resident.