Monthly Business Newsletter – March 2025

Welcome to our latest monthly newswire. We hope you enjoy reading this newsletter and find it useful. Please contact us if you wish to discuss any issues further.

March 2025

Bank of England Base Rate Cut to 4.5% – What’s Next?

The Bank of England has reduced its base rate to 4.5%, a move that was widely anticipated in the days leading up to the decision. The vote was decided by a 7-2 majority, with two members pushing for an even lower rate of 4.25%.

Could this signal a trend of rate cuts throughout 2025? Here’s a closer look at the key economic factors influencing this decision.

UK Inflation Forecasts 2025

The Consumer Price Index (CPI) stood at 2.5% in the final quarter of 2024. However, new data from January 2025 revealed a surprising increase to 3.0%, primarily driven by higher transport and food costs.

The Bank of England had already projected that CPI inflation would peak at 3.7% by autumn 2025 due to global energy price rises and regulatory adjustments. However, the unexpected early increase raises questions about whether inflation will remain higher for longer than anticipated.

Despite this, the Bank maintains its outlook that inflationary pressures are easing and expects CPI inflation to return to 2% by the end of 2025.

UK Economic Growth Forecasts

The Bank predicts that UK GDP growth will accelerate from mid-2025, though they acknowledge that the economy’s productivity growth has been slower than expected.

While demand has softened, only a small amount of economic slack has emerged, which influenced the decision to cut rates. The Bank has stated that future rate reductions will be gradual and depend on economic conditions.

Will There Be Further Interest Rate Cuts in 2025?

The Bank of England has signaled that future monetary policy decisions will be cautious, particularly given the uncertainties around economic demand and supply.

Additionally, global economic volatility has increased, particularly due to recent U.S. trade tariff changes and retaliatory measures. As these developments unfold, the Bank’s stance on future rate cuts may be reassessed.

For now, economic uncertainty remains the only certainty.

Do You Need to Pay Tax on Your Side Hustle?

With the rising cost of living, more people are earning additional income through side hustles. But do you need to pay tax on these earnings? HMRC has launched new guidance to help individuals understand their tax obligations and avoid unexpected bills.

Common Side Hustles and Their Tax Implications

1. Selling Goods Online – If you sell handmade items, upcycled furniture, or resell products for a profit, HMRC considers this trading.
2. Side Gigs – Jobs such as delivery driving, dog walking, or tutoring done regularly may count as trading.
3. Freelancing & Multiple Jobs – If you work independently across several roles, you may need to register as a sole trader.
4. Content Creators & Influencers – If you earn from sponsored posts, ad revenue, or affiliate marketing, this income is taxable.
5. Property Rentals – Renting out a spare room or a second property may be subject to tax, though allowances like the Rent a Room Scheme (£7,500) and the Property Allowance (£1,000) may apply.

Tax-Free Allowance for Side Hustles

If your total self-employed income is under £1,000 per tax year, you don’t need to report it. However, if you exceed this threshold, you must inform HMRC and may need to pay tax.

Selling fewer than 30 items a year does not automatically exempt you from tax. Online platforms must report sales exceeding this threshold, but what matters is whether you exceed the £1,000 trading allowance.

If you’re unsure about your tax obligations, contact us today for expert guidance on side hustle tax rules.

Economic Growth Update: Chancellor’s Key Announcements

Chancellor Rachel Reeves recently outlined the government’s latest economic growth plans. Key areas of focus include infrastructure development and boosting innovation hubs.

Oxford-Cambridge Growth Corridor

The government aims to transform this region into a UK version of Silicon Valley, with improved transport links, new housing, and enhanced business facilities. Cambridge University is also set to develop a flagship innovation hub.

Heathrow Airport Expansion

Plans for a third runway at Heathrow are advancing, with the government expecting proposals this summer. The expansion is projected to boost UK GDP by 0.43% and create 100,000 jobs.

Additional Economic Measures

Other initiatives include employment law reforms, pension system changes, and regulatory improvements to attract investment.

For a full breakdown of the Chancellor’s speech, click here.

How to Keep Your Business Positive Amid Economic Uncertainty

Recent surveys show business confidence has hit a 10-year low, excluding the pandemic. Here’s how you and your team can maintain motivation despite gloomy economic forecasts.

1. Cultivate Resilience – Remind yourself and your team that economic cycles are temporary. Reflect on past challenges you’ve overcome.
2. Highlight Strengths – Celebrate small business wins to keep morale high.
3. Transparent Communication – Keep your team informed about challenges and opportunities to foster trust.
4. Encourage Innovation – Economic challenges often present new business opportunities.
5. Maintain a Long-Term Vision – Short-term uncertainty should not derail long-term business goals.

By focusing on adaptability, resilience, and growth, your business can weather economic downturns and emerge stronger.

If you need expert financial guidance, contact us today!