The Spring Statement on 3rd March 2026 provided an update on the economy and public finances, without introducing any major tax changes.
The Chancellor of the Exchequer, Rachel Reeves reiterated the governments focus on reducing the cost of living, lowering borrowing and supporting economic growth.
Here we will breakdown what has been announced and how it could affect you.
Economic outlook from the OBR
The Office for Budget Responsibility (OBR) published a 125-page report alongside the Spring Forecast. It noted that the fiscal context ahead of the next budget remains challenging. Key points from the report included:
- Productivity growth is expected to rise to 1% in the medium term.
- Labour supply growth is forecast to slow due to lower net migrations and population aging.
- GDP growth is projected to fall to 1.1% in 2026, then average 1.6% over the rest of the forecast period.
- Inflation is expected to return to the 2% target in late 2026.
- Public sector net borrowing is forecast to fall from 5.2% of GDP in 2024//25 to 1.6% in 2030/31.
- Weekly wage growth is expected to slow to around 3.5% in 2026 and then average 2.25% .
- Unemployment is forecast to rise from 4.75% in 2025 to 5.33% in 2026, mainly due to new entrants into the labour market.
The OBR also noted that the tax-to-GDP ratio is forecast to reach 38% by 2030/31, departmental spending pressures remain, and welfare spending may continue to be affected by rising disability and health-related caseloads since the pandemic.
It is important to note that the current situation in the Middle East have not been factored into any of the data released by the OBR.
Changes to personal taxes
Most thresholds remain frozen until April 2031, including the basic rate band, higher rate threshold and personal allowance. Changes to tax measures include:
- Dividend savings tax rates for basic and higher rate taxpayers will increase by 2% from April 2026/27.
- Property income over £1,000 will be taxed at separate rates of:
o Basic rate taxpayer - 22%,
o Higher rate taxpayer - 42%
o and additional rate taxpayer - 47%
- ISA limits remain unchanged until 2031, though from April 2027 the annual cash ISA limit will be set at £12,000, with the remaining £8,000 allocated to stocks and shares ISAs (except for those aged 65+).
Employment and National Insurance updates
Employee NIC rates for 2026/27 remain at 8% and 2%, with employer NICs at 15%. The Secondary Threshold stays at £5,000 until 2031. The National Living Wage and National Minimum Wage will increase from 1st April 2026.
From April 2029, only the first £2,000 of employee pension contributions made via salary sacrifice will be exempt from NICs after this they will be subject to employer and employee NICs like other workplace pension contributions.
Capital taxes – what’s changing?
Capital Gains Tax (CGT) rates and the annual exemption remain unchanged for 2026/27. From November 2025, the relief for disposals to Employee Ownership Trusts has exempt 50% of the gain rather than 100%.
Unused pension funds and certain benefits will be brought into the estate for Inheritance Tax from April 2027. Agricultural and business property relief will be capped at £2.5 million per personal from April 2026, with excess qualifying for 50% relief.
Business tax measures and incentives
Corporation tax rates remain unchanged, with the main rate staying at 25% from April 2026. Writing Down Allowances will reduce from 18% to 14% from 1st April 2026 for corporation tax purposes and 6th April 2026 for income tax purposes, and a new 40% first-year allowance will apply to qualifying expenditure from January 2026.
The Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCTs) will see increased company limits from 6th April 2026, while Income Tax relief for VCT investors will reduce from 30% to 20%. The Enterprise Management Incentives scheme will expand to cover larger companies and higher option limits.
Final thoughts
Overall, the Spring Forecast 2026 provides a clearer picture of where the UK economy is heading, highlighting both the progress made and the challenges that remain. Whilst no new changes were announced, several of the upcoming changes announced in the Autumn Statement 2025 may still affect businesses and individuals over the coming years.
If you have any questions about anything that was covered in the Spring Forecast, or would like to discuss your own circumstances, our team is here to help.
