Spring Statement 2025: what did Rachel Reeves reveal?
Today the Chancellor of the Exchequer Rachel Reeves delivered her first Spring Statement to the House of Commons updating MPs on the country's finances and the Government's plans for tax and public spending. Alongside her statement, the Government published an updated assessment of the UK economy from the Office for Budget Responsibility (OBR). That assessment indicated that the outlook for the UK economy has worsened since the Autumn Budget in October 2024 with the OBR judging the Chancellor is not on track to meet her fiscal rules. UK Government borrowing was £10.7bn last month, higher than was expected last month. The Chancellor set out her plans for spending on welfare, aid, defence and more.

Rachel Reeves announced spending cuts aimed at making savings of £5bn year by 2030 from the welfare bill and savings by reducing Government running costs by 15% by the end of the decade, with about 10,000 civil service jobs expected to go. But aside from spending cuts, the Government will increase defence spending to 2.5% of national income by 2027, though the funds are being reallocated from the international aid budget.

The increase in NICs announced in the Autumn Budget in October 2024 will come in from 6th April 2025 as a serious additional cost for employers leaving many across various sectors in the economy struggling to maintain viable businesses and faced with possibly cutting staff numbers. But it is not just employers' NICs which are rising, but also the National Living Wage, on top of increased employment rights - such as a day one right to sick pay. With slowing growth of the UK economy, higher inflation, tighter financial conditions and an urgent need to increase defence spending that has meant a difficult situation for the Chancellor.

The OBR's forecast is expected to confirm that the £9.9bn financial buffer to meet her budget rule by the 2029-30 financial year has been wiped out. Reeves has repeatedly said her rules are "non-negotiable" but ahead of the Spring Statement 2025 it's widely reported that the Treasury has drafted plans for several billion pounds of spending cuts. It is understood welfare spending is in the firing line, but other UK Government departments will also see their budgets pruned. OBR


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What did we see of interest to classic car enthusiasts?

Fuel duty freeze until 2025-26
The temporary 5p cut in fuel duty rates extended by 12 months in the Autumn Budget 2024 will remain and will expire on 22nd March 2026. The planned inflation increase for 2025-26 will also not take place. The freeze is a tax cut worth £3 billion over 2025-26 which represents a £59 saving for the average car driver.
See NEWS update below

Increase in NICs announced in the Autumn Budget 2024
The additional cost of the NICs increase for businesses providing specialist maintenance, restoration and replacement parts services, will be passed on to purchasers in whole or part increasing the costs of those services for classic car owners.

2025-26 Vehicle Excise Duty rates for cars, vans and motorcycles
The Government will uprate standard Vehicle Excise Duty (VED) rates for cars, vans and motorcycles, excluding first year rates for cars, in line with the RPI from 1st April 2025. There was no mention of any adjustments to the current VED exemption arrangement for historic vehicles over 40 years old.

Potholes
The financial settlement for the transport sector in the Autumn Budget 2024 provides increased investment in local roads maintenance. It does this by "going beyond the Government’s promise to fix an additional 1 million potholes per year and providing a £500 million cash increase on 2024-25 local roads maintenance baseline funding". No adjustment to the settlement was announced by the Chancellor.

Alcohol duty
The UK Government will support pubs and the wider on-trade by cutting alcohol duty rates on draught products below 8.5% alcohol by volume (ABV) by 1.7%, so that an average ABV strength pint will pay 1p less in duty. The Government will also increase the discount provided to small producers for non-draught products, and maintain the cash discount provided to small producers for draught products, increasing the relative value of Small Producer Relief. Alcohol duty rates on non-draught alcoholic products will increase in line with RPI inflation. These measures will take effect from 1st February 2025. The current temporary wine easement will also end as planned on 1st February 2025. So a pint of real ale should have 1p less in duty at your local pub.

Other topics

VED on Electric Vehicles from April 2025
With the UK Government's ban on the sale of new petrol and diesel vehicles from 2030 the reform of motor taxes had become an urgent question for the Treasury because the switch to electric cars means almost £30bn in fuel duty raised annually for the Treasury will need to be replaced. VED will be paid by electric vehicles from April 2025.

Updates with additional news seen on the Spring Statement and the OBR economic and fiscal outlook

BBC comment mentioning fuel duty
A post on the BBC News thread about 15 minutes after the Chancellor had sat down reports comments from an OBR forecaster on the "tax share to hitting a post-war high". Posted 250326 @ 14.13