The government’s 2025 Spending Review outlines a major funding boost for healthcare, defence, housing, and infrastructure to support long-term recovery and growth.

The 2025 Spending Review was published on 11 June 2025 and outlines the government's plans to support the country’s recovery by investing in security, health, and the economy. It sets budgets for government departments up to 2028–29 for everyday spending, and up to 2029–30 for long-term projects like infrastructure. Overall, departmental budgets will grow by 2.3% during this period. The review also sets funding levels for the devolved governments in Scotland, Wales, and Northern Ireland.

This includes a £29 billion investment to revitalise the NHS. The funding aims to modernise the health service, address backlogs, and future-proof care delivery. Specifically, up to £10 billion will be used towards digital transformation and technology. This will include measures to expand GP training to deliver millions more appointments, enhance mental health services in schools.

Beyond healthcare, the Spending Review also set out substantial investments in defence, infrastructure, housing and energy security. This includes £15 billion for a nuclear warhead programme and £6 billion for munitions manufacturing. Border security and asylum processing are also set for major upgrades.. Border security and asylum processing are also set for major upgrades.

The government will also channel billions into local transport, rail links, and regional regeneration projects, while launching the largest social and affordable housing programme in a generation with £39 billion over ten years. The devolved administrations will receive their largest real-terms settlements since devolution began in 1998 to help ensure that locally tailored priorities are funded robustly.

Once your income passes £100,000, your tax-free allowance starts to shrink. Between £100,000 and £125,140, the effective tax rate climbs to 60%, but smart planning can help.

If you earn over £100,000 in any tax year your personal allowance is gradually reduced by £1 for every £2 of adjusted net income over £100,000 irrespective of age. This means that any taxable receipt that takes your income over £100,000 will result in a reduction in personal tax allowances.

Your personal Income Tax allowance would therefore be reduced to zero if your adjusted net income is £125,140 or above. Your adjusted net income is your total taxable income before any personal allowances, less certain tax reliefs such as trading losses and certain charitable donations and pension contributions.

If your adjusted net income is likely to fall between £100,000 and £125,140 your £12,570 tax-free personal allowance is gradually tapered. This tapering continues until your allowance is fully withdrawn at an income level of £125,140. This effectively results in a 60% marginal tax rate on income between £100,000 and £125,140.

For example, if your adjusted net income is £110,000, you would lose £5,000 of your personal allowance. This additional £5,000 is taxed at 60% due to the combined effect of the 40% higher rate of Income Tax and the partial loss of the personal allowance.

If your income sits within this band you should consider what financial planning opportunities are available in order to avoid this personal allowance trap by trying to reduce your income below to £100,000. This can include giving gifts to charity, increasing pension contributions and participating in certain investment schemes.

From self-employment to rental income, there are many reasons you may need to file a Self-Assessment return. Know the triggers and register with HMRC by 5 October if this is your first time.

There are a number of reasons why you might need to complete a self-assessment return. This includes if you are self-employed, a company director, have an annual income over £150,000 and / or have income from savings, investment or property.

You must file a self-assessment tax return if any of the following apply to you during the tax year:

• You were self-employed as a sole trader and earned more than £1,000 (before expenses).
• You were a partner in a business partnership.
• Your total taxable income exceeded £150,000 in the 2025–26 tax year. However, even if your income is under £150,000, other factors (such as rental income or capital gains) may still require you to file a self-assessment return.
• You had to pay Capital Gains Tax on the sale or disposal of assets.
• You were liable for the High Income Child Benefit Charge.
• You had other sources of untaxed income, such as:
  • Rental income from property
  • Tips or commission
  • Savings and investment income (including dividends)
  • Foreign income

If you need to file a self-assessment return for the first time, you must inform HMRC by 5 October following the end of the tax year. For the 2025–26 tax year (which ends on 5 April 2026), the deadline to register is 5 October 2026.

HMRC has an online tool www.gov.uk/check-if-you-need-tax-return/ that can help you check if you are required to submit a self-assessment return.

You could earn up to £18,570 in tax-free savings interest in 2025–26, thanks to the personal allowance, starting rate for savings, and the Personal Savings Allowance.

If your taxable income for the 2025–26 tax year is less than £17,570, you will not pay tax on the interest you receive. This figure combines the £5,000 starting rate for savings (taxed at 0%) with the £12,570 personal allowance.

In addition, the Personal Savings Allowance (PSA) provides further tax-free savings interest: basic-rate taxpayers can earn up to £1,000 in interest tax-free, while higher-rate taxpayers can earn up to £500. Those who pay the additional rate of tax on income over £125,140 are not eligible for the PSA. This means that a basic-rate taxpayer with no other income could receive up to £18,570 in tax-free interest.

It's important to understand that if your total non-savings income exceeds £17,570, you are no longer eligible for the starting savings rate. However, if your non-savings income falls between £12,570 and £17,570, the starting rate is reduced by £1 for every £1 your income exceeds your personal allowance.

Interest earned from ISAs or premium bond winnings is not included in these thresholds and remains tax-free. Those with higher savings in tax-free accounts can continue to benefit from their applicable PSA.

Banks and building societies no longer deduct tax from interest payments automatically. If you do owe tax on savings income, you must declare it through a self-assessment tax return.

If you’ve overpaid tax on your savings interest, you can submit a claim for a refund. Claims can be backdated up to four years from the end of the current tax year. For the 2021–22 tax year, the deadline to make a claim is 5 April 2026.

BT has announced that it may exceed its previously stated target of cutting 40,000 jobs by 2030, as artificial intelligence (AI) becomes more central to its operations. The move comes as the company accelerates its cost-cutting programme and seeks to reorient itself in a changing telecoms landscape.

The CEO, Allison Kirkby, who took over in early 2024, has emphasised efficiency, automation, and simplification. Since then, BT has exited international operations, focused more tightly on its UK telecoms core, and made plans to separate out divisions like Openreach to unlock shareholder value.

The company is now embedding AI across key departments, including customer service, fault detection, and network operations. Automation of routine tasks is enabling BT to reduce headcount while aiming to improve efficiency and service delivery. AI-driven tools are being integrated into call centres and technical support functions, with a view to replacing human input for common troubleshooting and account management requests.

The financial rationale is clear. BT is in the midst of a £3 billion cost-reduction programme and has said that increases in employer national insurance contributions alone could cost it £100 million annually. Leveraging AI is seen as one of the few scalable methods of preserving margins while continuing to invest in infrastructure.

This restructuring has important implications across the telecoms sector. Job losses will be concentrated in customer-facing roles and back-office operations. At the same time, there is likely to be increased demand for skilled AI engineers, data analysts, and cybersecurity specialists.

Smaller providers and BT’s supply chain will need to adapt quickly. Companies offering AI systems, automation tools, and support services may find new commercial opportunities, particularly if BT’s adoption drives wider change in the sector.

The risk is that over-automation could impact customer service and employee morale. BT will need to strike a careful balance to maintain brand reputation and service levels, especially as it faces competition from a possible Vodafone–Three merger and new market entrants.

BT’s direction under Kirkby points to a leaner, more tech-led organisation. For investors, this may offer stability and long-term growth. For employees, it signals ongoing transformation and the need for reskilling. For the wider economy, it highlights how AI is moving beyond hype and directly reshaping corporate strategy and workforce planning.

Chancellor Rachel Reeves delivered her first Spending Review to Parliament last week, setting out the government’s financial priorities for the next three years. Her approach signals a shift away from austerity towards a strategy of state-backed investment, aimed at boosting growth and productivity while maintaining fiscal credibility.

The review promises a substantial increase in capital spending, with key allocations for transport infrastructure, energy security, housing, and green technology. The government pledged a multi-year uplift in NHS and defence funding, while committing to invest heavily in rail, roads, and nuclear energy projects.

Day-to-day departmental budgets are set to grow modestly in real terms, but the largest gains will be in capital allocations. The spending framework also relies on projected efficiency savings of £14 billion, which will be used to fund some of the more ambitious commitments.

For UK businesses, the implications vary by sector. Construction and engineering firms can expect opportunities from increased infrastructure spending, particularly those aligned with green objectives and transport. Firms in digital healthcare, AI, and clean energy technologies may also see a benefit from targeted support and public procurement opportunities.

Technology businesses are likely to see some growth stimulus through investment in digital public services and AI infrastructure. Similarly, the life sciences and carbon capture sectors are expected to benefit from targeted research and development initiatives.

However, the business community remains cautious. The Spending Review comes at a time when government debt is at historically high levels, and market confidence is sensitive to fiscal overreach. Some forecasters have warned of a potential shortfall of up to £20 billion in the government’s medium-term plans, which could necessitate either tax increases or tighter departmental controls later this year.

There is also concern over the government’s reliance on efficiency savings to meet its commitments. While welcomed in principle, businesses and economists alike remain sceptical about how quickly those savings can be delivered in practice.

In summary, the Spending Review presents a growth-focused and investment-driven agenda. For business, it brings opportunities, particularly in sectors aligned with the government’s infrastructure, green and digital priorities. However, there are risks associated with delivering on these promises if forecasts fall short or efficiency measures do not materialise as planned.

Use your own vehicle for work? You could be entitled to a tax-free mileage allowance. Make sure you are not missing out on HMRC-approved rates.

If you use your own car, van, motorcycle, or bicycle for business journeys, you may be entitled to a tax-free mileage allowance from your employer. This is known as a Mileage Allowance Payment (MAP) and is designed to cover the costs of using a personal vehicle for work-related travel. Many employees routinely claim this allowance when driving their own vehicle to visit clients, travel between temporary work locations, or attend off-site meetings.

It’s important to understand that MAPs do not apply to ordinary commuting, that is, travelling to and from your regular place of work. However, where travel is genuinely work-related and qualifies as a business journey, the allowance can be a valuable tax-free benefit.

Employers typically reimburse employees using HMRC’s approved mileage rates, which are designed to reflect reasonable running costs. These rates are as follows:

• Cars and vans:
  • 45p per mile for the first 10,000 business miles in a tax year
  • 25p per mile for each mile over 10,000
• Motorcycles: 24p per mile
• Bicycles: 20p per mile

Where an employee carries a colleague as a passenger during a business journey, an additional 5p per mile per passenger can be claimed provided the journey is for business purposes. This extra allowance is also tax-free when paid by the employer.

If an employer pays less than the approved HMRC rates (excluding the passenger allowance), you may be able to claim the shortfall from HMRC utilising Mileage Allowance Relief.

Selling your main residence? Private Residence Relief can exempt you from Capital Gains Tax. If you meet certain conditions, there may be nothing to pay.

In most cases, Capital Gains Tax (CGT) does not apply to the disposal of a property that has been used as your main family residence. This exemption known as Private Residence Relief can eliminate CGT entirely if certain conditions are met. However, the relief does not apply to investment properties that have never been used as your home.

To qualify for full Private Residence Relief, the following conditions must generally be satisfied:

1. The property has been your only or main residence throughout the entire period of ownership.
2. No part of the property has been let out, with the exception of taking in a lodger.
3. No area of the home has been used exclusively for business purposes. (Using a room occasionally or temporarily as a home office does not count as exclusive business use.)
4. The garden and grounds, including any outbuildings, do not exceed 5,000 square metres (just over an acre).
5. The property was not acquired with the sole intention of making a profit.

If a property has been your home at any point, the final 9 months of ownership are automatically treated as a period of qualifying residence for CGT purposes, even if you were not living there when the property was sold. In some limited circumstances, this final exempt period can be extended to 36 months (for example, where the homeowner moves into care or is unable to sell immediately).

Additional reliefs may also be available if the homeowner had to live or work away from home for extended periods.

It's also important to note that married couples and civil partners can only designate one property as their main home at any given time for tax purposes.

If one partner in a marriage or civil partnership earns under £12,570, you could save up to £252 a year, and up to £1,260 if you backdate your Marriage Allowance claim for the past four years.

The Marriage Allowance can be claimed by married couples and civil partners where one partner does not pay tax or does not pay tax above the basic rate threshold for Income Tax (i.e., one partner must earn less than the £12,570 personal allowance for 2025-26).

If claimed, the lower-earning partner can transfer up to £1,260 of their unused personal tax-free allowance to their spouse or civil partner. The transfer can only be made if the recipient (the higher-earning partner) is taxed at the basic 20% rate, which typically means they have an income between £12,571 and £50,270. For those living in Scotland, this would usually apply to an income between £12,571 and £43,662.

By using the allowance, the lower-earning partner can transfer up to £1,260 of their unused personal allowance, which could result in an annual tax saving of up to £252 for the recipient (20% of £1,260).

If you meet the eligibility criteria and have not yet claimed the allowance, you can backdate your claim for up to four years. This could provide a total tax saving of up to £1,260 and would include the tax years 2021-22, 2022-23, 2023-24, 2024-25 and the current 2025-26 tax year. Applications for the allowance can be submitted online at GOV.UK.

Lifetime gifts can reduce Inheritance Tax, but survival for seven years and using key exemptions like the £3,000 annual allowance are crucial to making them fully tax-free.

Most gifts made during a person’s lifetime are not immediately subject to Inheritance Tax (IHT). These are known as potentially exempt transfers (PETs) and can become completely exempt from IHT if the person making the gift (the donor) survives for more than seven years after making the gift.

If the donor dies within three years of making the gift, it is treated as if the gift was made on the date of death, and the full rate of IHT may apply. However, if death occurs between three and seven years after the gift, taper relief can reduce the amount of tax payable. The further away from death the gift was made, the lower the tax rate applied, although this only reduces the tax due on the amount above the nil rate band.

It’s important to note that taper relief does not reduce the value of the gift itself, only the tax payable, and it does not apply where the gift is within the nil rate band. Additionally, it does not lower the tax on chargeable lifetime transfers to below the amount originally assessed when the gift was made.

Each tax year, individuals can also take advantage of specific IHT exemptions that allow gifts to be made tax-free, regardless of survival for seven years.

The annual exemption allows you to gift up to £3,000 in total each tax year without adding to the value of your estate for IHT purposes. This amount can be given to one person or shared among multiple recipients. If the full £3,000 exemption isn’t used in one tax year, it can be carried forward, but only for one additional tax year.

The small gift allowance allows you to give as many gifts of up to £250 per person per tax year as you like, as long as no other exemption is used for the same individual. This is ideal for birthday or seasonal gifts made from regular income.

Additionally, you can make tax-free gifts in celebration of weddings or civil partnerships. These are exempt up to £5,000 for a child, £2,500 for a grandchild or great-grandchild and £1,000 for anyone else.

The BADR Capital Gains Tax rate has risen to 14% from April 2025 and will increase further to 18% in April 2026.

Business Asset Disposal Relief (BADR) offers a valuable tax advantage by applying a reduced rate of Capital Gains Tax (CGT) on the sale of a business, shares in a trading company or an individual’s interest in a trading partnership.

As part of the measures announced in the Autumn 2024 Budget, the CGT rate for gains eligible for BADR has increased. For disposals made on or after 6 April 2025, the CGT rate has risen from the previous 10% to a higher rate of 14%. This change is now in effect and applies to any qualifying disposals taking place within the 2025–26 tax year.

Another forthcoming increase to the CGT rate under BADR is set to take place from 6 April 2026. It will rise to 18%. This means that disposals qualifying for BADR on or after this date will face a significantly higher tax charge compared to the original 10% rate that had long been associated with the relief.

The lifetime limit for claiming BADR remains at £1 million. This means that individuals can still benefit from the relief more than once, provided the cumulative gains across all qualifying disposals do not exceed this threshold.

Changes have also been made to Investors’ Relief. Specifically, the lifetime limit for Investors’ Relief was reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. In addition, the CGT rates for Investors’ Relief have now been brought in line with those of BADR currently at 14% and increasing to 18% from April 2026.

Identity verification is now rolling out for directors, PSCs, and agents, with more filing roles to be included soon under new anti-fraud rules.

Companies House is beginning to roll out mandatory identity verification. This is part of wider reforms introduced by the Economic Crime and Corporate Transparency Act that was granted Royal Assent in October 2023. This legislation strengthens Companies House’s authority to prevent the misuse of corporate structures and tackle economic crime.

A key feature of the Act is the requirement for identity checks for individuals involved in company formation, management, or ownership in the UK. Eventually, anyone incorporating a company or being appointed as a director or a person with significant control (PSC) will be legally required to complete identity verification.

Authorised Corporate Service Providers (ACSPs)

Since 18 March 2025, any ACSP that is defined as an individual or organisation conducting Anti-Money Laundering (AML) supervised activities must verify their identity before they can register as an authorised agent with Companies House.

Since 8 April 2025, ACSPs that are registered as authorised agents are permitted to carry out identity verification on behalf of their clients. This means that only those registered as authorised agents will be allowed to submit filings on behalf of other businesses.

Directors and Persons with Significant Control (PSCs)

Also, since 8 April 2025, directors and PSCs are able to verify their identity voluntarily. Over time, this step will move from optional to mandatory, forming a required part of compliance when forming or managing a company.

Individuals Filing with Companies House

At present, identity verification is not compulsory for individuals submitting filings to Companies House. However, this will also change in due course, with verification becoming a statutory obligation in the future.