Spring Statement 2025: What contractors need on March 26th

With Spring Statement 2025 fast-approaching on March 26th 2025, businesses, recruiters, and contractors are keeping a close eye on what might be announced.

While the government has pledged to limit tax changes to once a year, economic pressures could force their hand.

So below is a list of 10 announcements we would like to see from chancellor Rachel Reeves at next month’s Spring Statement, writes Chris Bryce, chief executive of the Freelancer & Contractor Services Association.

In short, though, the UK needs real, practical measures that support contractors and the flexible workforce, strengthen compliance, and drive economic growth.

1. No new Employer’s NICs (ErNICs) increase

Last year’s hike in ErNICs to 15% was a major blow to businesses.

It’s a tax on jobs, plain and simple, increasing hiring costs and putting pressure on wages. The government should reconsider this increase -- or at the very least, offer some relief for small businesses like the one-person companies run by contractors.

2. Coherence on umbrella company reform

The government has committed to cleaning up the umbrella sector, which is something we fully support. Yesterday’s response to the ‘Tackling Non-Compliance in the Umbrella Company Market’ consultation is therefore something we welcome.

But the nature of the umbrella regulation announcement at Autumn Budget 2024 came as a shock to compliant firms. And it became increasingly unclear how HMRC would avoid creating more problems than they solve.

Amendments by the DBT (Department for Business and Trade) to the Employment Rights Bill pave the way to a new workable solution - and a regulator, the Fair Work Agency (FWA).

We hope the chancellor will adjust to developments since October’s Budget, consider suggested alternative routes to umbrella regulation and use the new provisions in the Employment Rights Bill to avoid destabilising well-functioning and compliant umbrellas which make up the majority of the market.

3. Cracking down on payroll pirates

Regulation is only as good as its enforcement which is why we support umbrella companies being brought into scope of the FWA.

However, if the government is serious about tackling tax avoidance and non-compliance by payroll pirates, then it needs to properly fund the FWA and HMRC compliance teams.

Businesses doing things the right way shouldn’t be the ones facing all the scrutiny while non-compliant models continue to operate unchecked, which is why enforcement resources must be properly targeted.

Merely shifting the liability to recruiters won’t work.

4. A sensible approach to Statutory Sick Pay (SSP) reform

SSP reform is coming, but it must take into account the realities of temporary work. We’ve already raised concerns about how this could impact umbrella companies, recruitment agencies and small businesses, particularly when it comes to workers between assignments.

Spring Statement 2025 needs to provide clear guidance and cost mitigations.

5. Better support for small contractor businesses and the self-employed

Small businesses and the self-employed drive economic growth, yet they’re often treated as an afterthought in tax policy.

Measures like tax relief for training costs, better access to finance, and support for digital transformation, would make a real difference to contractors.

6. Realistic National Minimum Wage (NMW) implementation

The increase in the National Minimum Wage is welcome, but businesses need realistic timeframes and support to adjust.

This is particularly important for sectors reliant on temporary workers, where last-minute wage hikes can cause major disruption.

We welcome engagement from the Low Pay Commission and look forward to them meeting our members, but we’ll be watching Spring Statement intently for any supportive developments on NMW implementation.

7. More investment in digital tax solutions

HMRC’s new umbrella pay calculator and its push for e-invoicing show a move towards more digital tax compliance.

That’s a good thing—but only if the tools actually work.

Further investment in user-friendly, well-integrated payroll and tax solutions would make compliance easier for everyone. We welcome the engagement commitments made by HMRC’s Making Tax Digital Team.

8. Making the Apprenticeship Levy work for all, including contractors

With over £3.5 million already pledged to the FCSA Levy Network, businesses clearly want to invest in training and upskilling. The problem? The current rigid structure of the Apprenticeship Levy makes it hard for temporary and contract workers to benefit.

At Spring Statement, we need more flexibility to be unveiled so that funding can be used where it’s actually needed.

In particular, we want chancellor Reeves to increase the Apprenticeship Levy transfer limit so more apprenticeships can be supported through levy transfers and the duration of courses to be decreased.

9. Fix IR35, once and for all

IR35 and the off-payroll working rules are still causing headaches. Businesses and contractors alike need simpler, clearer compliance rules, and the CEST tool from HMRC needs serious improvement.

The government should also focus on tackling tax avoidance properly, rather than unfairly penalising those trying to follow the rules.

10. Whitehall efficiency savings

Since Autumn’s Budget, we’ve all had to cut our cloth accordingly. We believe the government should do the same and lead by example.

We are encouraged that the government has created a new priority of “rooting out waste and inefficiency” for its new Office for Value for Money (OVfM).

FCSA believes there are many savings to be made and that the creation of the FWA can serve as a model for rationalising the total number of regulators and public bodies while enhancing their effectiveness.

What happens between now and March 26th?

The Spring Statement is a crucial moment for the contracting and recruitment industry.

At FCSA, we’re pressing the Treasury and other policymakers for practical, well-thought-out measures that support the contingent workforce while keeping compliance standards high - and driving them ever higher. With umbrellas and contractors in mind, we’ll be watching closely three weeks from today to ensure that the needs of the flexible workforce and the wider contractor sector are heard.