In October's Autumn Budget, Rachel Reeves unveiled £40bn worth of tax rises, but the government says the Spring Forecast on 26 March will simply offer an update on the state of the nation’s finances.
However, this hasn't stopped rumours circulating about possible changes the Chancellor could make to boost economic growth.
What is the Spring Forecast?
A statement will be made in the House of Commons on 26 March, alongside a forecast from the Office for Budget Responsibility (OBR). These forecasts assess the impact of government policy decisions and economic developments.
How will it differ from a Budget?
On paper, this isn't another Budget and shouldn't feature major economic changes. The official line from the Treasury is that there will only be one 'major fiscal event' each year – the Autumn Budget.
Despite this, speculation is growing that Reeves could use the event to announce new measures to balance the books and jump-start the economy.
Office for National Statistics data shows the economy expanded by just 0.1% in the final quarter of 2024, after registering no growth in the previous quarter. The Bank of England also predicted a slowing of economic growth this year, downgrading its original forecast of 1.5% to 0.75%.
The latest Spring Forecast rumours
Income tax freeze
One persistent rumour being reported in the national newspapers is that Reeves may extend the planned freeze on income tax thresholds beyond 2028.
Thresholds mark the limit of what someone can earn before they move into the next tax band. They were frozen by the previous government in 2021-2022, and the Chancellor said in the Autumn Budget that they would rise in line with inflation from April 2028.
Extending the freeze could help the government bring in as much as £4bn a year, according to The Institute for Fiscal Studies.
Find out more:Tax hikes
The Autumn Budget included a freeze on inheritance tax (IHT) thresholds until 2030, and clamped down on IHT reliefs for farms and businesses. But one area the government has so far left alone is IHT gifting rules.
One of the most straightforward ways to avoid IHT is to consider giving away assets while you are still alive. Under current rules, gifts are IHT-free so long as you live at least seven years after they are made. But some outlets are speculating that the Chancellor could extend that time period to 10 or even 15 years.
Find out more:Cash Isa shake-up
Isas allow people to save up to £20,000 a year without paying a penny in tax on the interest they earn. There are several different types on the market, but the cash Isa is the most popular.
There has been speculation that the investment industry is lobbying the Chancellor to push savers towards stocks and shares Isas instead, believing this will help stimulate economic growth.
Potential changes could include reducing the annual tax free-allowance on cash Isas, possibly to just £4,000, or adjusting the personal savings allowance.
Find out more:Lifetime Isa reforms
The lifetime Isa (Lisa) could be reformed. The Lisa's main selling point is that the government pays a 25% bonus on savings.
One of the main purposes of Lisas is to help people buy their first home, but the limits have remained unchanged despite house prices rising over the years.
Find out more:undefinedsource https://www.which.co.uk/news/article/spring-forecast-what-is-it-and-how-might-it-affect-your-finances-aj6r20w0me4g