Chancellor Rachel Reeves delivered the 2026 Spring Statement on 3 March, providing an update on the UK economy and public finances.
The government has committed to one major fiscal event each year, meaning no significant tax changes were expected. Instead, the 2026 Spring Statement focused on how the current economic plan is performing and what lies ahead.
A key message throughout was that the government believes its approach is working, particularly in three areas:
Reducing the cost of living
Inflation, borrowing and debt interest are all forecast to fall, while investment is rising.
Cutting borrowing
Borrowing is expected to be lower than previously forecast and fall below the G7 average.
Growing the economy
GDP per person is set to grow more than initially expected, although overall growth remains modest.
Here’s our summary of key points:
Economic Forecasts:
- Growth is expected to slow to 1.1% in 2026 before averaging 1.6% in the following years.
- Inflation is forecast to return to 2% by late 2026.
- Unemployment is expected to rise slightly before stabilising.
Public Finances:
- Borrowing is projected to fall steadily over the coming years.
- However, the overall tax burden is set to reach a historic high.
- Spending pressures, particularly around welfare, remain a concern.
Personal Tax:
- Income tax thresholds remain frozen until April 2031.
- The personal allowance stays at £12,570.
- Dividend tax rates increase slightly from April 2026.
Employment & Wages:
- National Living Wage and Minimum Wage rates are increasing from April 2026.
- Employer National Insurance remains at 15%, with thresholds frozen.
Savings & Investment:
- ISA limits remain unchanged, although future restrictions on cash ISAs are planned.
- Changes to dividend and savings tax will increase the tax burden for some investors.
Business:
- Corporation Tax rates remain unchanged.
- Changes to capital allowances and late filing penalties take effect.
- Additional clarity is expected for businesses claiming R&D tax relief.
Looking Ahead
The Office for Budget Responsibility highlights that the outlook remains challenging, with slow growth and ongoing pressure on public finances.
Our full 2026 Spring Statement summary explores these updates in more detail and what they could mean for you or your business.
| If you would like to understand how the changes from the 2026 Spring Statement may affect your finances or future plans, please get in touch with our team. |
