Spring Budget 2025: Key Takeaways and Westlock Partners’ Perspective on R&D Tax Relief Reforms

Chancellor Rachel Reeves’ Spring Budget 2025 delivered a mix of economic reforms, tax policy adjustments, and investment initiatives designed to support growth and innovation. At Westlock Partners, we have been closely following these developments, particularly those concerning R&D tax relief. Below, we outline the key takeaways from the Budget and share our thoughts on what businesses should be considering in response.

Economic Outlook and Business Impact

The Office for Budget Responsibility (OBR) has forecast a fiscal deficit of £4.1 billion for 2029/30, highlighting the ongoing challenge of balancing economic stimulus with financial stability. The government’s commitment to public service reform and investment in digital transformation signals an opportunity for businesses engaged in technology and innovation. However, the tax landscape remains uncertain, with potential further changes in the pipeline.

Tax Policy and R&D Tax Relief: What’s Changing?

One of the most significant developments for our clients, in particular, is the government’s ongoing review of the administration of R&D tax relief to ensure its effectiveness and to ensure the scheme achieves its intended policy objectives. The Spring Budget confirmed that reforms are on the horizon, with a particular focus on preventing fraud and improving the efficiency of claims. One of the key proposals under consideration is the introduction of mandatory advance assurance; a measure that would require businesses to seek HMRC approval before making an R&D claim.

At Westlock Partners, we support the rationale behind this proposed amendment, as fraudulent and erroneous claims have historically been at unacceptable levels. However, we recognise the potential for increased administrative burdens on businesses genuinely engaged in R&D. There is also a risk that limited awareness of this requirement among potential claimants could lead to missed opportunities for much-needed relief, similar to the challenges we’ve seen with first-time claimants navigating the pre-notification process. Our concern is that SMEs, in particular, may experience longer lead times before accessing relief, which could impact future operations, investment decisions, and budget planning.

Our Thoughts and Recommendations

Given these potential changes, we recommend that businesses take proactive steps to ensure compliance and ensure that they are well placed if the mandatory advance assurance is implemented:

  1. Prepare for Advance Assurance – If the proposal is implemented, businesses may need to provide detailed justifications of their R&D activities upfront. Partnering with an experienced advisory firm can ensure that claims are both compliant and complete, helping to avoid potential delays caused by incomplete or non-compliant submissions.

  2. Maintain Audit-Trail – HMRC’s increasing focus on compliance means maintaining robust evidence of R&D activity is more critical than ever. Keeping clear records of project activities, challenges, and costs will be essential.

  3. Stay Ahead of Legislative Changes – As further details on R&D tax relief reforms emerge, businesses should remain informed and adjust their approach accordingly. At Westlock Partners, we continuously monitor legislative updates to provide our clients with the most up-to-date guidance and ensure effective planning takes place in advance.

Final Thoughts

The Spring Budget 2025 reinforces the government’s commitment to supporting innovation while tightening compliance. At Westlock Partners, we welcome reforms that enhance the integrity of the R&D tax relief system, but we will also be advocating for measures that ensure businesses can continue to access the relief efficiently and that potential claimants of the scheme are not excluded due to a lack of awareness of critical amendments made to the scheme and claim process.

If you have any concerns about how these changes might affect your R&D claims, our team is here to help. Reach out to us for expert advice on navigating the evolving tax landscape.