How Will the New Spring Statement Impact UK Film and TV Productions?

On March 26, 2025 UK Chancellor Rachel Reeves presented her Spring Statement to Parliament. Despite a backdrop of low economic growth and increasing government borrowing costs, the Chancellor remains committed to her “non-negotiable” fiscal rules that aim to bring stability to the economy and security for working people. With further borrowing ruled out and a determination not to announce further tax changes, her focus has been on government spending.

For production companies and studios operating in the UK, the headlines from the Spring Statement include:

• An increase in the minimum hourly rates;
• An increase in employers’ National Insurance Contributions (NICs); and
• A crackdown on tax evasion.  

The results of a spending review will be announced on June 11, 2025. This will allocate government spending for the three years from 2026/27 to 2028/29.

Minimum wage rates  

As previously announced, the minimum hourly rates that employers must pay their employees will increase from April 1, 2025. Employers must pay their employees at least these minimum rates to avoid penalties, back payments and other regulatory action.

If you have employees paid at or just above these levels, you need to ensure that birthdays, full working hours and deductions are properly captured and dealt with. Please contact us for any support with your production payroll, including the operation of minimum wage levels.

Employment taxes

Payroll teams should note the below changes to employment taxes.

Personal allowance

The tax-free personal allowance will remain at £12,570 in 2025/26. The personal allowance is partially withdrawn if an individual’s income is over £100,000 and then fully withdrawn if their income is over £125,140.

Income tax rates and allowances

For 2025/26, most income tax rates and thresholds remain at their 2024/25 levels. After an individual’s tax-free ‘personal allowance’ has been deducted, their remaining income will be taxed in bands in 2025/26 as follows:

‘Other income’ means income other than from savings or dividends, including salaries, bonuses, profits made by a sole trader or a partner in a business, rental income, pension income and various other income types.

Different rates of income tax apply to an individual’s ‘other income’ if they are classed as a ‘Scottish taxpayer’. These are:

NICs

NICs deducted from employee wages will remain at the following levels in 2025/26.

However, significant changes will apply for NICs paid by employers, with the previously announced increase in the rate of employers’ NICs from 13.8% to 15% going ahead from 6 April 2025. This is combined with:

• A decrease in the threshold at which an employer starts to pay NICs on each employee’s salary from £9,100 to £5,000. (Note that a higher threshold of £50,270 applies for employees who are under 21 and apprentices under 25. Other variations can also apply.)
• An increase in the amount of the ‘employment allowance’, which eligible employers can offset against their employers’ NICs liability, from £5,000 to £10,500.
• A relaxation in the rules that determine which employers are eligible for the employment allowance. Until April 5, 2025, the employment allowance has only been available to businesses with a prior tax year employers’ NICs liability of less than £100,000. This rule no longer applies for 2025/26, meaning employers may be able to access the £10,500 allowance, even if their 2024/25 employers’ NIC cost exceeded £100,000. Other restrictions on claiming the employment allowance still apply (including a limit of just one allowance between connected employers), so please do check with us if you are unsure whether you are able to make the claim or how to do so.

The increase in employers’ NICs and the reduction of the threshold for NICs – as well as the increased minimum wages – could have a significant impact on production payroll budgets (for more information, watch our recent Master Series “Budgeting for 2025: What UK Productions Need to Know”).

If you’re planning to shoot in the UK in 2025, you’ll need to be mindful of these increased costs and the dates on which they come into effect so that you can factor them into your production budgets and cashflows.

Business tax matters

Self-employed NICs

Self-employed individuals pay ‘Class 4’ NICs in addition to their income tax liability. The Class 4 NIC rates and thresholds for 2025/26 remain broadly similar to 2024/25 – in particular:

VAT

From April 1, 2025, the Value Added Tax (VAT) registration and deregistration thresholds will remain at £90,000 and £88,000 respectively. There have been no changes to the rates of VAT and the standard rate continues to be set at 20%.  

Electronic invoicing

The government has recently launched a consultation on the possible advantages of e-invoicing, which include productivity enhancements, cashflow acceleration and error reductions. It also considers how HMRC can support investment and encourage uptake within the business community.

Business rates

As announced last year, film studios will be given a 40% relief on their business rates in 2025/26. The Film Studio Business Rates Relief will be available for eligible studios in England until 2034, and, where applicable, will be backdated to 1 April 2024. The relief will maintain the UK’s status as a world leader in the creative industries and will help the government to deliver its Plan for Change.

Dealing with HMRC

Also part of its Plan For Change are the government’s steps towards modernising HMRC, which aim to improve value for money, enhance efficiencies and support economic growth. Greater innovation, including grasping technological opportunities, is at the heart of this, transforming HMRC into a ‘digital-first’ organisation. A ‘HMRC transformation roadmap’ will be published in the summer.

Improving customer service – including with AI

HMRC officials have been undertaking work to learn best practices in customer service from various successful UK brands. This includes trialling the use of generative artificial intelligence (AI) to point taxpayers to the advice they need on GOV.UK.

HMRC is also expected to roll out more widely a system where taxpayers can use their voice as their password to pass security checks faster and more securely.

New PAYE portal

In April 2025, HMRC will launch a new PAYE portal. This is intended to be a new, simple way for 34 million employees and pensioners to check the data that HMRC holds on their employment and pensions, to notify HMRC of any changes, and to find simple explanations to understand the impact of changes on their tax codes.

Tax avoidance and non-compliance

As part of a wider initiative to close the ‘tax gap’, new legislation will be introduced to further tackle tax avoidance and prevent non-compliance.

Particular focus will be applied to offshore tax non-compliance by the wealthy. HMRC are recruiting experts in private sector wealth management and deploying AI and advanced analytics to help identify hidden funds.

Another new consultation considers whether HMRC’s powers are effective in dealing with non-compliance that is facilitated by unscrupulous tax advisers.

HMRC compliance activity

In addition to HMRC receiving a budget to recruit and fund new compliance caseworkers and debt collection officers, we are told that the department is also investing in AI to improve the targeting of compliance work and make HMRC more productive.

With several high-profile tax evasion cases in recent years, these heightened compliance measures may place particular scrutiny on the film and TV industry.

Increased penalties under Making Tax Digital

The government is increasing the late payment penalties for taxpayers within the Making Tax Digital (MTD) regime, whether for VAT and/or income tax. Increased rates will apply from April 2025 or when the individual or business joins the MTD regime in question, if later.

The new rates will be 3% of the tax outstanding where tax is overdue by 15 days, plus 3% where tax is overdue by 30 days, plus 10% per annum where tax is overdue by 31 days or more. 

HMRC is also reviewing the penalty framework that applies across the board when a taxpayer either:

• Makes a mistake in a tax return or document; or
• Omits to notify HMRC of circumstances that affect their tax liability. 

It is expected that any new regime will continue to distinguish between genuine mistakes (where often a penalty is not charged at all) and conscious attempts to cheat the tax system. Overall, the emphasis is on simplifying and strengthening the penalty system.

Interest on unpaid tax liabilities

From 6 April 2025, the late payment interest rate charged by HMRC on unpaid tax liabilities will increase by 1.5 percentage points. For most taxes, this will set late payment interest at the Bank of England base rate plus 4%.

The above developments reinforce the importance of keeping your production’s tax affairs up-to-date and adequately budgeting for future tax liabilities. To mitigate your risk and avoid penalties, make sure that your accounting software is fully compliant with HMRC’s MTD rules. EP’s SmartAccounting has been fully optimised to support UK film and HETV productions – please contact us to find out more.

Next steps

The Spring Statement was an economic update given in challenging circumstances, in what was regularly referred to as a ‘changing world’. The government remains focused on securing Britain’s future and seizing opportunities.

While there was nothing in the Spring Statement specifically aimed at the creative industries, Head of Bectu Philippa Childs has expressed hope that future statements will include positive measures to address the current commissioning challenges and support freelancers. In particular, Bectu is calling for a Freelance Commissioner to work across government to champion workers and ensure support where necessary.

If you would like to find out more about how the Spring Statement will impact film and TV productions shooting in the UK, contact us today.

This article contains general information on a subject that may be of interest to you. Nothing in this article should be considered payroll, tax or legal advice. You should consult with your own advisors regarding the applicability of this information to your specific circumstances.