The UK Chancellor delivered the 2025 Spring Statement yesterday. While no major tax rises were introduced, there were key changes and signals that small business owners should be aware of, especially around VAT penalties, Making Tax Digital, and HMRC’s tightening enforcement plans.

At Carthy Accountants, we’re already digging into the detail so you don’t have to. Here's what you need to know.

VAT and Self Assessment: Late Payment Penalties Are Rising

From April 2025, penalties for late payment of VAT and Self Assessment tax will increase:

• From 2% to 3% at 15 days
• From 2% to 3% at 30 days
• From 4% to 10% from day 31

This is a clear message from HMRC: pay on time or face heavier consequences. Now’s the time to review your systems, ensure your bookkeeping is up to date, and speak to us if you’re unsure about your upcoming deadlines.

Making Tax Digital: What’s Coming Next?

Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) is expanding:

• From April 2026: Sole traders and landlords earning £50,000+
• From April 2027: Threshold drops to £30,000+
• From April 2028: Those earning £20,000+ will join

That means digital record keeping and more regular submissions will soon be a reality for the vast majority of business owners and landlords. If you’re not ready, now is the time to act. We can help you make the switch to compliant cloud software like Xero.

Parental Leave Support for Small Employers

From April 2025, the Small Employer Compensation Rate rises from 3% to 8.5%, meaning eligible employers can recover 108.5% of payments like Statutory Maternity Pay. This is a welcome move for smaller teams navigating statutory obligations.

HMRC Collections and Direct Recovery

HMRC will restart the “direct recovery” of tax debts, targeting individuals and companies they believe have the means to pay. Automation is also being explored for collecting lower-value debts, suggesting fewer delays or leniency for late payments.

Now’s the time to check your tax accounts are up to date.

Child Benefit and R&D Tax Relief Changes

• From summer 2025, a new digital service will allow employed individuals to report High Income Child Benefit Charges and pay directly via PAYE, without needing to register for Self Assessment.
• A new consultation is underway around advance clearances for R&D tax credits, with a goal of reducing fraud and increasing certainty for businesses.

What’s Next?

The Autumn Budget will provide more detail, but the direction of travel is clear: tougher enforcement, a push toward digital compliance, and a tighter grip on public spending.

Get the Business You Want

The Spring Statement confirms what we already know; change is constant. With deadlines moving, penalties rising, and compliance tightening, it’s never been more important to have a proactive accounting partner.

At Carthy Accountants, we’ll keep you ahead of the curve, whether that’s with timely advice, Xero expertise, or helping you prepare for Making Tax Digital.

Get in touch to talk through how these changes affect your business and how we can help.