Here are more reactions to the details coming out of the UK government's spring statement earlier in the week.

On Wednesday, as reported here, any hopes that the UK Chancellor of the Exchequer might change course on taxes as they affect affluent and HNW clients were disappointed. Government forecasts for economic growth were cut and, with public coffers under pressure, wealth managers will continue to be busy trying to help clients handle these pressures. Certain changes, such as those affecting inheritance tax (IHT), are going ahead. 

Here are more reactions from practitioners across the industry. 

Helena Luckhurst, partner, Fladgate, a law firm
In a major change to the current rules, from 6 April 2025, anyone who is not a “Long-term UK resident” (LTR) is outside the UK’s inheritance tax net, at least for their non-UK situs assets.

For individuals aged 20 or older, LTR status means that they must have been UK resident for at least 10 of the previous 20 tax years. However, once an individual ceases to be UK resident, LTR status is also phased out on a sliding scale of between three to 10 years. For example, if the individual was UK resident for 13 of the past 20 tax years before becoming non-UK resident, they will lose their LTR status after three tax years of non-UK residency. If they were UK resident for 16 years, they lose LTR status after six tax years of non-UK residency, and so on.

Under the current law, returning Brits who are “formerly domiciled resident” have their worldwide assets exposed to IHT after a grace period of only one tax year – not a very generous “welcome home.” Fast forward to 6 April 2025, and it’s a completely different picture for returning Brits who have been abroad for at least 10 consecutive tax years in the previous 19. Their non-UK situated assets are not subject to IHT for 10 years, beginning with the UK tax year of their arrival – a very nice welcome home.

Of course, you don’t have to be a Brit to enjoy this IHT treatment but the contrast between the current rules and the soon-to-be current rules could not be starker for those born in the UK with a UK domicile of origin in particular.

The change is also a significant win for Brits who intend to stay abroad. Under current rules, individuals living abroad who retain their UK domiciles (actual or deemed) are exposed to IHT on their worldwide estates, regardless of where they are tax resident. It’s hard to lose a UK domicile if you like to move between different countries or intend to return to the UK upon retirement. From 6 April 2025, ex-pats just need to work at staying “not LTR” if they want to keep their non-UK situs outside the clutches of IHT.

Hugo Smith, head of private wealth at Broadfield, a law firm
The Spring statement includes proposals to give HMRC additional powers to crack down on tax avoidance and evasion.

HMRC already has extensive powers to obtain information about taxpayers from taxpayers themselves and from financial institutions. HMRC also receives unprecedented volumes of information from overseas revenue authorities as part of the global agreements on international tax information exchange. In 2018/19, HMRC used this information to recover £100 million ($1.29 million) from non-compliant taxpayers. Whilst HMRC’s “Connect” computer analyses the information and identifies potential non-compliance, an increase in the personnel at HMRC to follow this up will certainly help to collect more funds for the public purse.

The government and HMRC have, for many years pursued strategies to reduce tax avoidance – the legitimate but artificial reduction of tax liabilities – as well as evasion. They are now consulting on even more draconian measures to counteract marketed avoidance schemes.

The Disclosure of Tax Avoidance Schemes (DOTAS) rules require information about schemes to be provided to HMRC at an early stage so that it can counteract them, using legislation if necessary. A failure to report information may result in penalties. The consultation proposes to create a strict liability criminal offence of failing to notify arrangements to HMRC under DOTAS which could result in two years in prison.

At present, HMRC can issue “Stop Notices” to promoters of schemes to prevent them from selling their schemes. It is now proposed to introduce a “Universal Stop Notice” which would prevent anyone for promoting the same or a “similar” scheme, potentially subject to criminal sanctions.

The Consultation also proposes to remove Legal Professional Privilege, which is fundamental to the confidentiality between lawyer and client in some situations.

A further consultation seeks to enhance HMRC’s powers to obtain information and impose greater sanctions on tax advisors who “harm the tax system and who facilitate non-compliance of their clients.”

It is clearly desirable to combat tax evasion and to discourage the use of abusive avoidance schemes. The concern with the proposals is that they are widely drawn and as well as catching their intended targets have the potential to include responsible professionals legitimately advising their clients on tax planning. It will be important to safeguard the ability of responsible advisors to advise in the best interests of their clients, especially if they could be subject to criminal sanctions.

To put these issues in perspective, HMRC acknowledges that there is a very small number of promoters of tax avoidance schemes. Further, avoidance contributes a mere 4 per cent to the £35.8 billion ($46.4 billion) “tax gap” (the estimated difference between the tax collected and the tax HMRC believes is due). The government seems to be devoting a lot of additional resources to tackling this comparatively small problem. Could those resources better be deployed in helping those taxpayers who are careless or who make innocent errors, who contribute 45 per cent to the tax gap, to get their tax liabilities right?

Rob Morgan, chief investment analyst at wealth manager Charles Stanley
Despite some fire and brimstone in the Chancellor’s delivery in the House of Commons, the revised forecasts for the UK economy and public finances from the government’s official forecaster, the Office of Budget Responsibility (OBR) paint an uncomfortable picture. 

The OBR slashed the GDP growth outlook for this year to just 1 per cent from the 2 per cent it predicted last October. It also upped its inflation forecast to 3.2 per cent and predicts price rises will not fall to target before 2027. This economic cocktail of weak growth and high inflation is an unpleasant one to swallow and would have resulted in the Chancellor shattering her fiscal rule without taking corrective action in the form of £14 billion of spending cuts.

There was, however, a more optimistic picture for the next four years with the OBR revising growth assumptions marginally upwards, almost making up for the 2025 downgrade over the five-year time frame. This was largely the result of the Chancellor’s planning reform policies now being integrated into longer-term forecasts.

Ahead of the day, Ms Reeves had emphasised that this was not to be a “tax and spend” event, so it was not a surprise to see her resist new tax rises. The government’s promise not to raise personal or corporate tax rates alongside some worrying early signs in the jobs markets will have also prevented her from opting for hikes. There is just too much risk in terms of upsetting profitability, growth and employment. The focus was therefore on reducing spending. However, there were a few items of note for personal finances in the accompanying documents.

There have been rumours circulating for the past few weeks that the government is considering making changes to ISAs to encourage more people to invest rather than save. 

Treasury documents released after the Spring Statement confirmed that it is investigating reforms to "strike the right balance" between cash and equities to earn "better returns for savers, boost the culture of retail investment and support the growth mission."

This implies that the cash ISA limit could be cut in future. Under current rules, savers and investors can split their £20,000 ISA allowance across the different ISA types, primarily cash and stocks and shares ISAs, as they see fit.

Encouraging greater use of stocks and shares ISAs over their cash equivalent could help more people build wealth over the long term and help direct capital towards productive investment, so it’s understandable why the government wants to examine this. However, a convoluted system of an ISA allowance with a sub-allowance in cash could introduce unwanted complexity into the ISA landscape. 

There has been significant pushback over some of the Chancellor’s planned measures for inheritance tax announced in October’s Budget. However, there was no further update on the cap on exemptions on business assets and agricultural land from 2026 nor the inclusion of pension pots in estates from 2027.

The changes will be of great concern to owners of family businesses and farms who aim to pass assets to the next generation. They potentially face additional complexities and large tax bills, especially in the absence of judicious financial planning.