Spring Statement 2025: What Contractors Need to Know

Key takeaways from the Chancellor’s announcement and what it means for you

Contractors might not have been front and centre in the 2025 Spring Statement, but there are still some important developments worth paying attention to. With a continued government focus on tax compliance, a confirmed rise in Employer National Insurance, and the expected rollout of umbrella company regulation from April 2026, the message is clear: tighten up, stay compliant, and be ready for change.

While there were no dramatic surprises, many of the measures announced could still affect your take-home pay, the way you operate, or the providers you choose to work with. So, what does this mean in practice?

Here at Compare Your Pay, we’ve broken down the most important updates from the Spring Statement, so you can clearly understand what’s changing – and what actions you might want to take next.

No New Tax Rises – But Employer NI Is Still Set to Increase

Chancellor Rachel Reeves reaffirmed that there will be no new tax increases in this year’s Spring Budget – a headline that will come as a relief to many. However, the rise in Employer’s National Insurance, originally announced in Autumn 2024, is still scheduled to take effect from 6 April 2025.

Under this change, Employer NI will increase from 13.8% to 15%, marking a 1.2% rise.

Why is this important for contractors?

If you work through an umbrella company, this could directly affect your pay. While it’s technically the umbrella company’s responsibility to cover Employer’s NI, most umbrellas factor this cost into your assignment rate – meaning you, the contractor, indirectly pay for it.

As a result, you may see a slight reduction in your gross pay, unless you can negotiate a higher rate with your agency or client to offset the additional cost. The good news is that many clients are already aware of the changes and may be open to discussions around rate increases.

Interestingly, the NI hike could also boost demand for contractors. As employers face rising costs for hiring permanent staff (such as salary, pension contributions, and Employer NI), many may seek more flexible and cost-efficient options – like short-term contractors. This could lead to more contract opportunities, especially for those in in-demand sectors such as IT, engineering, and healthcare.

Compliance Crackdown: More Investigations and Director Accountability

Compliance Takes Centre Stage in the Spring Statement

The government has made it clear it’s serious about compliance, announcing measures such as:

• Making company directors personally liable for unpaid taxes

• Tougher penalties for non-compliant tax advisers

• Publishing the names of sanctioned advisers

• Investing £1 billion into HMRC and hiring 500 new compliance officers

  
  

These steps signal tighter scrutiny across the board. It's a good reminder to make sure you're working with a reputable accountant, umbrella company, or tax adviser. Mistakes, even unintentional ones, could now carry much greater risks.

Umbrella Regulation for Contractors Is Still Coming – Just Not Yet

While umbrella companies weren’t directly mentioned in the Spring Statement, measures announced in the Autumn 2024 Budget are still moving forward – and they’re set to make big changes.

From April 2026, the responsibility for ensuring correct PAYE payments will shift away from umbrella companies and onto either the recruitment agency or end client. Umbrellas will still process payments and payroll, but if something goes wrong, it’s the agency or client who’ll be held accountable.

This regulation aims to:

• Strengthen compliance across the supply chain.

• Protect contractors from underpaid tax and National Insurance.

Although it’s still a year away, this shift will likely have a significant impact on how agencies and clients select and work with umbrella companies. 

We expect to see many organisations reviewing their preferred suppliers list to ensure they’re only working with fully compliant umbrellas.

If you’re a contractor currently using an umbrella, it’s worth reviewing their practices now to make sure they’re ready for what’s coming. And if you’re switching providers, choose one that has a strong track record and is clearly transparent about their fees and processes.

With these changes on the horizon, it could also be a good time to explore whether setting up your own limited company is right for you. Running a limited company can offer greater control over your finances, more flexibility in how you work, and potential tax efficiencies compared to using an umbrella. If you’re thinking about making the move, Go Limited can help you set up quickly, stay compliant, and make the most of the benefits a limited company structure can offer.

So, What Should Contractors Be Doing Now?

While the 2025 Spring Budget didn’t introduce anything groundbreaking for contractors, it did underline some key points that are worth considering:

✅ Be aware of the Employer NI rise – and if necessary, renegotiate your rate to reflect the cost increase.

✅ Stay alert to future regulation – especially around umbrella companies and PAYE responsibility. The landscape is changing, and early preparation is always better than being caught off guard.

✅ Reassess your working model – if running a limited company is starting to feel like too much admin or risk, now might be a good time to explore the simplicity and support of an umbrella setup.

Looking for an Umbrella Provider?

If you’re thinking about switching umbrellas or want to make sure you’re working with the right one, Compare Your Pay is here to help.

Start your search with Compare Your Pay today – and take the hassle out of finding a contractor-friendly umbrella you can rely on.