Spring Statement 2025: Key takeaways for investors

It’s worth pointing out that Chancellor Rachel Reeves’ 2025 Spring Statement isn’t a full budget. 

With Labour committed to just one major fiscal event per year, this statement serves more as an update on the economy’s health and a review of progress since the October Budget, which introduced some major policy shifts.

While smaller in scope compared to the October announcements, these updates can still affect your investment strategy. Below, we highlight the key takeaways from this statement, along with important reminders from the October 2024 Budget.  

The state of the UK economy

Spring Statement 2025 update: As expected, the Chancellor addressed the UK’s economic performance, while also stressing the need to adapt to a changing world. 

Against this backdrop, and with the government committed to reducing national debt, further cuts were deemed necessary, particularly in light of reduced growth forecasts and no additional borrowing allocated for day-to-day spending.

And while no new tax increases were announced, the increase in defence spending has been accompanied by cuts to welfare.

In the immediate aftermath, market reaction was relatively muted. Sterling was down as the Office for Budget Responsibility projected GDP growth of just 1%, down from the forecast of 2% made in October 2024. UK inflation fell to 2.8% in February, and with the Chancellor insisting that the 2% inflation target will be met by 2027, this could pave the way for a lower interest rate environment in the future.

UK investment opportunities could also arise from the Spring Statement, with the Chancellor highlighting support for sectors such as defence, housing and transport infrastructure. 

ISAs

Spring Statement 2025 update: Despite much talk beforehand about potential changes to the ISA system, no new announcements were made regarding ISAs in the Spring Statement – but the government is, however, looking at options for reform in the future.  

October 2024 Budget: ISA limits remain frozen until 2030. While in the only change to the ISA system, Chancellor Rachel Reeves scrapped the British ISA before it could take off.  

Actions to consider: With a £20,000 annual contribution limit, ISAs offer a straightforward and tax-efficient way for investors to grow their money, because no tax is paid on returns made on any money held within an ISA. 

Capital Gains Tax 

Spring Statement 2025 update: The government made no comments or announcements regarding Capital Gains Tax rates. 

October 2024 Budget: The Chancellor raised Capital Gains Tax (CGT) rates, with the lower rate increasing from 10% to 18% and the higher rate from 20% to 24% effective from 30 October 2024.

The annual CGT exemption remains at £3,000. CGT rates for Business Asset Disposal Relief and Investors’ Relief will rise to 14% in April 2025, aligning with the new 18% rate by April 2026.

CGT rates for residential property remain at 18% and 24%. 

ISAs, SIPPs and their junior versions are still exempt from CGT and income tax. 

Actions to consider: Investors may wish to consider maximising their contributions to ISAs and SIPPs, since all returns made on investments in these accounts are tax-free.

Investment ISAs remain a top choice, with 26% more Smart Investor customers having used their full £20,000 ISA allowance this tax year, compared to the last tax year.

And if you haven’t used all your ISA allowance yet and have shares or investments held in an Investment Account, you could consider a Bed and ISA. This allows you to move existing investments from non-ISA accounts into an ISA – keeping future income and gains free from UK income tax and CGT. 

Inheritance Tax 

Spring Statement 2025 update: The government made no announcements or comments regarding Inheritance Tax. 

October 2024 Budget: The Inheritance Tax threshold has been frozen until 2030, with the first £325,000 of an estate inherited tax-free. This rises to £500,000 for direct descendants’ primary residences and up to £1 million if transferred to a spouse.

Starting April 2027, inherited pensions, including SIPPs, will be subject to Inheritance Tax.

Lifetime gifts are still exempt if given more than seven years before death, with a sliding scale for gifts made within seven years.

For a full breakdown of current allowances, see our guide: Key tax rates, limits and allowances: At-a-glance. 

Actions to consider: Investors can reduce Inheritance Tax exposure by using annual gift allowances (up to £3,000) and gifting to children early. Placing assets in trusts may also help shield wealth. 

While ISAs are part of an estate for Inheritance Tax, transfers to a spouse remain exempt. It’s also worth noting that inherited pensions will be subject to Inheritance Tax from April 2027.

But, given the complexities with Inheritance Tax, you should always consult a financial and tax adviser before making any decisions. 

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The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.