UK Spring Statement 2026
On 3 March 2026, the Chancellor, Rachel Reeves, delivered the UK Spring Statement 2026.
The statement did not introduce major new tax measures. Its primary purpose was to provide updated economic forecasts and an update on the public finances, based on projections prepared by the Office for Budget Responsibility.
The government has previously indicated that the Autumn Budget will remain the main annual fiscal event for tax policy changes.
Economic Forecasts
According to the updated forecasts:
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Economic growth is expected to remain modest in 2026.
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Inflation is projected to continue easing towards the Bank of England’s target.
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Unemployment is forecast to rise during 2026 before stabilising in later years.
These forecasts reflect current economic conditions and form the basis of the government’s fiscal projections.
Unemployment and Workforce Considerations
The forecast increase in unemployment may have implications for the labour market. For employers, this may affect:
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Recruitment conditions
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Wage growth trends
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Workforce planning
For some sectors, labour availability may increase. For others, demand conditions may remain a more significant factor. Businesses may wish to review staffing structures, cost bases and forward projections in light of the updated economic outlook.
No New Tax Measures Announced
The Spring Statement did not introduce:
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Changes to income tax rates
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Changes to corporation tax rates
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New VAT measures
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New National Insurance rate adjustments
As a result, attention now shifts to tax measures previously announced in the Autumn Budget that are scheduled to take effect from the start of the new tax year.
Tax Year 2026/27 – Measures Taking Effect
The new tax year begins on 6 April 2026. Businesses and individuals should ensure systems and planning reflect changes that were previously legislated.
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Businesses
- Corporation Tax and VAT rates are unchanged
- From April 26, any unused £1 million allowance for the 100% rate of agricultural property relief and business property relief will be transferable between spouses and civil partners.
- Reduction in ‘main rate’ Writing Down Allowances from 18% to 14% from April 26
- Introduction of new first-year allowance of 40% for ‘main-rate assets’ from 1 January 2026, does not apply to second-hand assets or cars
- Minimum Wage/Living Wage increases from April 2026:
- Apprentices from £7.55 to £8
- 18-20 year olds from £10 to £10.85
- Over 21 from £12.21 to £12.71
- “Salary sacrifice” pension contributions above £2,000 will be liable to employee and employer National Insurance from April 2029. Any contributions above £2,000 will still get tax relief.
- Corporation Tax and VAT rates are unchanged
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Individuals
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- Freeze on Income Tax & National Insurance thresholds for a further three years until April 2031, this will mean more people will find themselves in the higher bands over time.
- A 2% tax rate increase on dividends, savings and rental income from April 2027.
- Plan 2 student loan repayment thresholds will be frozen from 2027-28 until 2029-30
- The yearly ISA limit is still £20,000, but from April 2027 anyone under 65 will have to put at least £8,000 of it into a non-cash ISA, like a stocks and shares ISA.
Removal of the two-child limit on the “child element” of Universal Credit (UC) from April 2026- A new mileage tax for electric vehicles from April 2028. The charge will equal 3p per mile for battery electric cars and 1.5p per mile for plug-in hybrid cars. This means an electric car driver travelling 8,500 miles per annum will have an additional £255 charge.
- Fuel duty to remain frozen until September 2026.
- In April 2026, the State Pension will increase by 4.8%.
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National Living Wage Changes from April 2026
Summary
The Spring Statement 2026 did not introduce new tax measures. It provided updated economic forecasts and confirmed that the Autumn Budget remains the primary vehicle for tax policy changes.
If you require clarification on how the 2026/27 tax year rules apply to your circumstances, please contact us.