Spring Statement 2026

The Chancellor held the Spring Statement on 3 March 2026. The government has been keen to have only one tax event per year (the Budget) and so the Spring Statement was intended to provide an interim update on the economy and public finances.

Whilst the Chancellor did meet the commitment not to make major tax announcements, there was plenty to say on the economy more generally.

Looking back a year, the previous Statement focused on a commitment to increasing defence spending, cuts to the welfare state and economic growth. Over the last year, the majority of those cuts to welfare spending were not supported by backbench MPs and the economy has continued to grow slowly, so what did the Chancellor have to say a year on?

The strap line was that current policies mean that the government has the right economic plan for Britain. The Chancellor stated that the ‘…Spring Forecast has shown that the government’s economic plan to cut the cost of living, cut national debt and grow the economy, is the right one.’

Whilst the speech was highly political, the Chancellor specifically referred to three particular areas to show that the government’s policies were working:

Cutting the cost of living – the OBR’s forecast shows inflation, borrowing and debt interest are falling, whilst investment is rising.

Cutting borrowing – the OBR’s forecast shows borrowing is down by nearly £18 billion compared to the autumn, with borrowing this year set to be the lowest in six years and falling below the G7 average.

Growing the economy – the OBR’s forecast shows GDP per person is now set to grow more than was expected in the Budget, with growth of 5.6% over the parliament.

Cutting the cost of living

The OBR’s forecast shows inflation, borrowing and debt interest are all falling while investment is rising. It now forecasts that inflation will return to target in the second half of this year – earlier than forecast in November – and delivering on the government’s plan to ease pressure on households.

The decisions the Chancellor took at the last Budget to ease the cost of living, including reducing people’s energy bills by £150 and freezing rail fares, are specifically expected to bring inflation down by 0.4ppt in 2026-27.

Easing the cost of living is the government’s number one focus. That’s why we are boosting the minimum wage for millions of workers, fully-funding 30 hours of free childcare, rolling out free breakfast clubs and helping family incomes by removing the two-child limit.

Cutting borrowing

The forecast shows borrowing is down by nearly £18 billion compared to the Autumn, with borrowing this year set to be the lowest in six years and falling below the G7 average for the first time in 22 years.

Already, we are expected to spend nearly £4bn less on debt interest next year than was forecast in the Autumn – money that can instead be spent on the things people rely on like our NHS and public transport.

The government is also reducing wasteful spending and driving efficiencies so that tax payer money can be spent wisely. This year was the lowest drawdown on the government’s contingency pot for day-to-day spending in almost a decade, showing they are keeping public finances stable.

The forecast shows headroom to the stability rule has increased to almost £24 billion.

The Government’s responsible approach to public spending means the Spring Forecast also reflects the recently announced £3.5bn of new funding for DfE in 2028-29 to support ambitious reforms to SEND resulting in £0.7bn of additional funding for Devolved governments through the Barnett formula.

Growing the economy

The OBR’s forecast shows GDP per person is now set to grow more than was expected in the Budget – with growth of 5.6% over the Parliament. Despite the global uncertainty, Britain’s economy remains strong – with faster growth than any other European country in the G7 in 2025.

The driving purpose of growing the economy is to make every part of Britain better off. The OBR has forecast that people will be over £1,000 a year better off after inflation, delivering on the government’s priority to build an economy that makes working people better off.

Further information

The Economic and Fiscal Outlook has been published on gov.uk

Methodology

Interest rates and debt costs

Stat: “If our debt interest rates return to the G7 average, we will have £15bn a year more for the priorities of working people.”

HMT calculations using Bloomberg data for G7 yields based on the market determinants window at this forecast (10 working days to 30 January 2026).
Direct fiscal savings are calculated as the debt interest cost reductions if yields fell to the G7 average (excluding the UK) using a weighted average of UK yields at 5,10 and 30 year maturities.
Under those assumptions, debt interest costs payable are lower by £15bn in the final year of the forecast.

Real wages (Speech)

Stat: “And real wages have now risen more since the election than they did during the first thirteen years of the previous government.”

HMT calculations based on ONS Earnings and working hours February 2026. This is based on a comparison of change in real wage levels published by the ONS. Periods are calculated over the following start and end points:

First 13 years of last parliament: May 2023 – May 2010 – Real wage levels grew by £5 a week over this time period,
This parliament: December 2025 – June 2024 – Real wages grew by £7 over this time period.

Mortgages – Speech

Stat: “The interest rate cuts we have supported will save families over £1,300 a year on a typical new fixed-rate mortgage.”

HMT calculations based on ‘Money and Credit’, Bank of England, March 2026 release of January 2026 data, Money and Credit – January 2026 Bank of England. This is based on a representative mortgagor with an advance of £215,000 and a term length of 29 years and a 2-year fixed rate mortgage.

Living standards – Speech

Stat: “and by the next election people will be over £1,000 a year better off after accounting for inflation.”

HMT calculations of annual RHDI per capita in the last year of the previous Parliament compared to the last year of the current Parliament, based on ‘Economic and Fiscal Outlook’, OBR, March 2026.

GDP per capita

Stat: ”The OBR’s forecast shows GDP per head is now set to grow more than was expected in the Budget – with growth of 5.6% over the Parliament.”

HMT calculations comparing GDP per capita in the last quarter of the current Parliament with the last quarter of the previous Parliament, based on ‘Economic and Fiscal Outlook’, OBR, March 2026.

Barnett funding

Spending Review 2025 provided devolved governments with their largest spending review settlements in real terms since devolution in 1998.
As a result of decisions at Spring Forecast 2026, the devolved governments are receiving an additional £1.8 billion RDEL excluding depreciation (RDELex) and £45 million general CDEL through the application of the Barnett formula between 2026-27 and 2029-30, including an exceptional application to the ‘write-off’ grants for Local Authority SEND deficits in England. This is on top of the record Spending Review 2025 settlements, and an additional £1.7 billion announced at Autumn Budget 2025:
The Scottish Government will receive an additional £900 million RDELex and £20 million CDEL
The Welsh Government will receive an additional £540 million RDELex and £15 million CDEL
The Northern Ireland Executive will receive an additional £380 million RDELex and £10 million CDEL
The Barnett formula normally only applies to changes in UK Government departmental DEL funding, meaning it would not mechanically apply to the £5.6 billion ‘write-off’ grants for Local Authority SEND deficits in England. However, the UK Government has decided to exceptionally apply the Barnett formula here in recognition of the principle that the devolved governments receive a population share of changes to spending in devolved policy areas in England. This results in £1.1 billion in Barnett consequentials for the devolved governments in 2026-27, included in the overall uplift of £1.8 billion. All devolved government settlements are growing in real terms between 2024-25 and 2028-29.
All devolved governments continue to receive over 20% more per person than equivalent UK Government spending in the rest of the UK. This means that for every £1 spent by the UK Government in devolved policy areas, the devolved governments are able to spend at least £1.20.
The Welsh Government and Northern Ireland Executive continue to be funded above their independently assessed level of relative need of 115% and 124% of equivalent UK Government spending in the rest of the UK in all years of the spending review period.

EMPLOYMENT

National Insurance contributions

Employees
For 2025/26 the rates of Class 1 employee NICs are 8% and 2%. The employer rate is 15%.

The Secondary Threshold is the point at which employers become liable to pay NICs on an individual employee’s earnings and is currently set at £5,000 a year from 6 April 2025. The government announced that this will be maintained at this level until April 2031.

The Employment Allowance allows eligible businesses with employer NICs bills to deduct £10,500 from their employer NICs bill.

The self-employed
For 2025/26 the rates of Class 4 self-employed NICs are 6% and 2%. These rates remain the same for 2026/27.

For Class 2 NICs from 6 April 2025:

Self-employed people with profits of £6,845 and above get access to contributory benefits, including the State Pension, through a National Insurance Credit, without paying Class 2 NICs.
Those with profits under £6,845 who pay Class 2 NICs voluntarily to get access to contributory benefits, including the State Pension, will continue to be able to do so.

Changes for 2026/27
The government will increase the Lower Earnings Limit (LEL) and the Small Profits Threshold (SPT) from 2026/27. For those paying voluntarily, the government will also increase Class 2 and Class 3 NICs for 2026/27.

The LEL will be £6,708 per annum (£129 per week) and the SPT will be £7,105 per annum. The main Class 2 rate will be £3.65 per week and the Class 3 rate will be £18.40 per week.

Employer NICs relief for veterans
The government will extend the employer NICs relief for employers hiring qualifying veterans to April 2028.

This means that businesses continue to pay no employer NICs up to annual earnings of the Veterans Upper Secondary Threshold of £50,270 for the first year of a veteran’s employment in a civilian role.

National Living Wage and National Minimum Wage
The government has announced increased rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from 1 April 2026. The rates which will apply are as follows:

	NLW	18-20	16-17	Apprentices
From 1 April 2026	£12.71	£10.85	£8.00	£8.00

The apprenticeship rate applies to apprentices under 19 or 19 and over in the first year of apprenticeship. The NLW applies to those aged 21 and over.

Taxable benefits for company cars
The rates of tax for company cars are amended for 2026/27:

the charge for zero emission cars rises from 3% to 4%
the charge for other cars with emissions below 75g/km increases by 1%
the maximum benefit of 37% remains.
The government has confirmed increases to the benefit in kind rates for company cars for tax years up to and including 2029/30.

The government announced that it is introducing a temporary easement to mitigate the increasing benefit in kind tax liabilities of plug-in hybrid electric vehicle (PHEV) company cars due to new emission standards. The easement will apply retrospectively from 1 January 2025 to 5 April 2028. Transitional arrangements will apply to certain PHEVs until 5 April 2031.

Car fuel benefit charge
The government will increase the car fuel benefit charge from 6 April 2026.

Company vans
The government will increase the Van Benefit Charge and the Van Fuel Benefit Charges from 6 April 2026.

Mandating the reporting of benefits in kind via payroll software
The government confirms that the use of payroll software to report and pay tax on benefits in kind will become mandatory, in phases, from April 2027. This will apply to income tax and Class 1A NICs.

Tackling tax non-compliance in the umbrella company market
To tackle the significant levels of tax avoidance and fraud in the umbrella company market, the government will make recruitment agencies responsible for accounting for PAYE and Class 1 NICs on payments made to workers that are supplied via umbrella companies.

Legislation will be introduced to make employment agencies or end clients joint and severally liable for any amount required to be accounted for under the PAYE provisions, where an umbrella company forms part of a labour supply chain. Further legislation will be introduced which will impose an equivalent joint and several liability for NICs purposes.

This will allow HMRC to pursue an agency in the first instance for any payroll taxes that a non-compliant umbrella company fails to remit to HMRC on their behalf. The end client will be liable if contracting directly with an umbrella company.

Where there is no agency, the responsibility will fall to the end client business.

This will take effect from 6 April 2026. The measure will protect workers from large, unexpected tax bills caused by unscrupulous behaviour from non-compliant umbrella companies.

Ending contrived car ownership schemes
The government is amending the benefit in kind rules so that vehicles provided through employee car ownership arrangements will be deemed to be taxable benefits when made available on restricted terms.

Under these arrangements an employer or a third party sells a car to an employee, often via a loan with no repayment terms and negligible interest, then buys it back after a short period.

These arrangements mean those benefiting don’t pay company car tax, which other employees pay, and so this measure will seek to level the playing field.

Arrangements existing prior to commencement will continue without a change in treatment until the earlier of the arrangement being varied, renewed, or 6 April 2032.

There will also be an exemption from the benefit in kind rules for vehicles provided on arm’s length terms within the motor industry.

The government has confirmed its intention to delay the operative date to 6 April 2030.

Changes to salary sacrifice for pensions from April 2029
The government is changing how salary sacrifice for pension contributions works.

Salary sacrifice is when you agree to reduce your gross salary or sacrifice a bonus and, in return, your employer pays the same amount into your pension.

From April 2029, only the first £2,000 of employee pension contributions through salary sacrifice each year will be exempt from NICs. Contributions through salary sacrifice, like all pension contributions, will still be exempt from Income Tax (subject to the usual limits).

Employers and employees can still make contributions above £2,000 through salary sacrifice arrangements. However, employee contributions above this amount will be subject to employer and employee NICs like other employee workplace pension contributions.

Employers will need to report the total amount sacrificed through their existing payroll. All employer pension contributions will continue to be free of NICs.

Employees, as well as employers, will pay NICs on the amount above £2,000 for employee contributions through salary sacrifice.

Employees who choose to salary sacrifice to receive Tax Free Childcare or Child Benefit can keep doing so.

Expanding workplace benefits relief
This measure will introduce new legislative exemptions for the reimbursement of eye tests, flu vaccines and home working equipment.

Under current law, the exemption only applies where the employer provides the benefit directly. This change will ensure that reimbursements are treated in the same way.

This will have effect on or after 6 April 2026.

Removal of tax relief on non-reimbursed homeworking expenses
This measure will remove the tax relief available to employees who have incurred additional household costs if they are required to work from home. These costs include increased household utility costs and business telephone calls.

It will only apply to those employees who have not had these costs reimbursed by their employer.

This will not impact the existing ability for employers that reimburse employees for costs relating to homeworking where eligible without deducting Income Tax and NICs.

This will take effect from 6 April 2026.

BUSINESS

Corporation Tax
The government has confirmed that the rates of Corporation Tax will remain unchanged, which means that, from April 2026, the rate will stay at 25% for companies with profits over £250,000. The 19% small profits rate will be payable by companies with profits of £50,000 or less. Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective Corporation Tax rate.

The penalty for taxpayers submitting a Corporation Tax return late will double for returns for which the filing date is on or after 1 April 2026.

Capital allowances
The Full Expensing rules for companies allow a 100% write-off on qualifying expenditure on most plant and machinery (excluding cars) as long as it is new and unused. Similar rules apply to integral features and long-life assets at a rate of 50%.

The government will reduce the main rate Writing Down Allowance (WDA) from 18% to 14% per year from 1 April 2026 for Corporation Tax purposes and 6 April 2026 for Income Tax purposes. For businesses with chargeable periods which span 1 April (Corporation Tax) or 6 April (Income Tax), a hybrid rate will apply. The WDA on the special rate pool remains at 6% per year.

For expenditure incurred on or after 1 January 2026, the government will introduce a new first year allowance (FYA) of 40% for all businesses on main rate assets, including most expenditure on assets for leasing. Cars, second-hand assets and assets for leasing overseas will not be eligible.

The Annual Investment Allowance is available to both incorporated and unincorporated businesses. It gives a 100% write-off on certain types of plant and machinery up to certain financial limits per 12-month period. The limit remains at £1 million.

The 100% FYA for qualifying expenditure on zero-emission cars and the 100% FYA for qualifying expenditure on plant or machinery for electric vehicle chargepoints have been extended to 31 March 2027 for Corporation Tax purposes and 5 April 2027 for Income Tax purposes.

Targeted Research and Development Advance Assurance Service
The government will pilot a targeted advance assurance service from spring 2026. This will enable small and medium-sized enterprises to gain clarity on key aspects of their Research and Development (R&D) tax relief claims before submission to HMRC. A summary of responses to the advance clearance consultation will also be published.

Advance Tax Certainty Service
A new Advance Tax Certainty Service will be launched in July 2026. This will provide major investment projects in the UK with certainty on the application of tax law to their specific circumstances. Qualifying project expenditure must be at least £1 billion. Subject to full initial disclosure of all material facts, a clearance will bind HMRC for five years, and may be renewed for a further five years.

Enterprise Investment Scheme and Venture Capital Trusts investment limit increase and restructure
The government has announced significant changes to the limits applying to the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) from 6 April 2026. The gross assets requirement that a company must not exceed for EIS and VCTs will increase from £15 million to £30 million immediately before the issue of the shares, and from £16 million to £35 million immediately after the issue. The annual investment limit that companies can raise will increase from £5 million to £10 million. For Knowledge-Intensive Companies (KICs), the annual investment limit will increase from £10 million to £20 million. The company’s lifetime investment limit will increase to £24 million and for KICs to £40 million. The Income Tax relief that can be claimed by an individual investing in VCTs will decrease from 30% to 20%.

Expanding the eligibility limits of the Enterprise Management Incentives scheme
The government is also increasing certain limits relating to the Enterprise Management Incentives (EMI) scheme. For EMI contracts granted on or after 6 April 2026, the employee limit will increase from 250 employees to 500 employees, the gross assets test will be increased from £30 million to £120 million, and the company share option limit will be increased from £3 million to £6 million. The limit on the exercise period will increase to 15 years, and will also apply retrospectively to existing EMI contracts which have not already expired or been exercised.

UK Listing Relief
The government has announced an exemption from the 0.5% Stamp Duty Reserve Tax (SDRT) charge on agreements to transfer securities of a company whose shares are newly listed on a UK regulated market. This measure will have effect for agreements to transfer made on or after 27 November 2025. The exemption will apply for a three-year period from the listing of the company’s shares. The exemption will not apply to the 1.5% SDRT charge, or where the transfer forms part of a merger or takeover where there is a change of control.

CAPITAL TAXES

Capital Gains Tax rates
The Capital Gains Tax rates remain unchanged for 2026/27.

Capital Gains Tax annual exemption
The annual exempt amount will remain at £3,000 for 2026/27.

Employee Ownership Trusts
The current relief available for qualifying disposals by business owners selling their shares to Employee Ownership Trusts (EOTs) is a 100% exemption of any gain. From 26 November 2025, the relief will only exempt 50% of the gain. Business Asset Disposal Relief and Investors’ Relief will not be available where the 50% exemption has been claimed. The remaining 50% of the gain on disposal will not form part of the disposer’s chargeable gain. Instead, 50% of the gain will be held over and deducted from the trustees’ acquisition cost. This will mean that it will come into charge on any subsequent disposal or deemed disposal of the shares by the trustees of the EOT.

Incorporation Relief
The government will introduce a requirement for taxpayers to actively claim incorporation relief for transfers of a business to a company on or after 6 April 2026. The relief previously applied automatically.

Business Asset Disposal Relief
The rate applying for individuals claiming Business Asset Disposal Relief and Investors’ Relief will increase to 18% for disposals made on or after 6 April 2026.

Carried interest rates and reform
From April 2026, all carried interest will be taxed within the income tax framework. A multiplier of 72.5% will be applied to any qualifying interest brought within the charge.

Inheritance Tax
Inheritance Tax nil rate bands
The nil rate band has been frozen at £325,000 since 2009 and will continue to be frozen until 5 April 2031. An additional nil rate band, called the ‘residence nil rate band’ is also frozen until 5 April 2031 at the current £175,000 level, as is the residence nil rate band taper starting at £2 million.

Unused pension funds and death benefits
The government will bring unused pension funds and death benefits payable from a pension into a person’s estate for Inheritance Tax (IHT) purposes from 6 April 2027.

All death in service benefits payable from registered pension schemes will be excluded from the value of an individual’s estate for IHT purposes.

The personal representatives will be responsible for paying any IHT due on unused pension funds and death benefits in a person’s estate. However, pension beneficiaries of registered pension schemes will be able to request the pension scheme administrator pay their IHT liability directly to HMRC in specific circumstances. They may also direct scheme administrators to withhold 50% of taxable benefits for up to 15 months.

The government has committed to capping the main rate of Corporation Tax at 25% for the duration of the Parliament.

Agricultural Property Relief & Business Property Relief
From 6 April 2026, agricultural and business property will continue to benefit from the 100% IHT relief up to a limit of £1 million. The limit is a combined limit for both agricultural and business property. Such property in excess of the limit will benefit from a 50% relief.

The £1 million limit applies per person and is refreshed every seven years. From 6 April 2026, this allowance will be transferable between married couples or civil partners. This will include where the first death was before 6 April 2026.

There may be a further £1 million allowance for trusts in certain situations but the rules are complex.

The £1 million limits for both individuals and trusts will be frozen until 6 April 2031.

Cap for excluded property in trusts
With effect from 6 April 2025, the government has retrospectively put in place a cap of £5 million for excluded property held in trust as at 30 October 2024. This cap applies to settled property which was excluded property situated outside the UK at the time of the relevant charge. The £5 million cap applies to each ten-year cycle.

OTHER INFORMATION

The VAT registration threshold
From 1 April 2026 the VAT registration threshold remains at £90,000 and the deregistration threshold at £88,000.

Making Tax Digital for Income Tax Self Assessment
The government is committed to delivering Making Tax Digital for Income Tax Self Assessment, which starts in April 2026 for those with qualifying income over £50,000. The government will expand the rollout of the programme to those with incomes over £30,000 in April 2027 and £20,000 in April 2028. However, the government will not proceed with Making Tax Digital for Corporation Tax.

Enforcement and tax collection
The government has announced a variety of compliance initiatives, which include the following:

investing further in HMRC’s debt management work and publishing a new tax debt strategy which outlines plans to deliver year-on-year reductions to the overall tax debt balance as a percentage of tax receipts
requiring Income Tax Self Assessment taxpayers with Pay As You Earn (PAYE) income to pay more of their Self Assessment liabilities in-year via PAYE from April 2029
investing in HMRC to modernise the tax system and help taxpayers get their taxes right first time through greater digitalisation. This investment will improve how HMRC uses information from third parties, and to build new technology to increase the use of data-driven prompts to help taxpayers avoid errors when submitting tax returns
investing £64 million over the next five years in HMRC’s existing partnerships with private sector debt collection agencies to collect more tax debt.
In addition, from April 2029 businesses will be required to issue all VAT invoices as e-invoices, with a roadmap on implementation to be published next year.

High Value Council Tax Surcharge
The current Council Tax system uses property values from 1991. From April 2028, properties valued at £2 million or more will be liable to a new High Value Council Tax Surcharge (HVCTS).

The HVCTS will be staggered depending on the value of the property. For property over £2 million, the annual charge will be £2,500. For property valued between £2.5 – £3.5 million, the annual charge will be £3,500 and for those properties valued between £3.5 – £5 million, the annual charge will be £5,000. Properties valued in excess of £5 million will have an annual charge of £7,500.

The surcharge will be collected alongside the existing Council Tax due for the property.

Employment
The government is working to extend right to work checks to cover businesses hiring gig economy and zero-hours workers. This will restrict the ability of employers to take advantage of illegal workers and ensure that legitimate businesses acting lawfully will not be undercut on labour costs by those who exploit the system.

The government will set up a dedicated ‘hidden economy’ team within the new Fair Work Agency from April 2026 to take action in sectors known to have breaches of employment rights legislation alongside illegal working and tax issues. The team will initially target hand car washes but will then move onto other high-risk areas.

Electric Vehicle Excise Duty
The government is introducing Electric Vehicle Excise Duty (eVED), a new mileage charge for electric and plug-in hybrid cars, which will come into effect from April 2028. Drivers will pay for their mileage alongside their existing VED.

The government will work closely with industry and motoring representative groups on the delivery of the new tax.

The tax paid by EV drivers will be around half the fuel duty rate paid by the average petrol/diesel driver, with a reduced rate for plug-in hybrid drivers. When eVED takes effect in April 2028, an average EV driver will pay around £240 per year or £20 per month.

Other vehicle types, such as vans, buses, motorcycles, coaches and HGVs, will be out of scope of eVED when it is introduced, with the transition to electric power for these vehicle types being currently less advanced than for cars.

Other points
Other announcements made by the government include:

the £35,000 threshold for Winter Fuel Payments will be maintained for this Parliament
the government is seeking views on the effectiveness of existing tax incentives, and the wider tax system, for business founders and scaling firms, and how the UK can better support these companies to start, scale and stay in the UK.