The Spring Statement provides the backdrop to the UK’s economic outlook ahead of the Autumn Budget. As anticipated, Rachel Reeves kept the update deliberately low-key, focusing on revised forecasts rather than announcing new tax measures. The Government reiterated its preference for a single major fiscal event each year, the Autumn Budget, and accordingly, no new tax changes were unveiled.
In a week dominated by fast-moving global events, the Spring Statement has, in many respects, slipped down the news agenda.
Key takeaways from the Statement
- No increases to tax rates, although previously announced frozen thresholds increase effective tax burdens despite no formal rate rises;
- Unemployment is expected to rise this year, and
- Inflation is projected to continue to fall.
What’s coming in April?
With no major changes announced in the Statement, it is worth recapping the measures due to take effect from 6 April 2026:
- A 2% increase to the basic and higher rates of dividend tax;
- The introduction of quarterly reporting requirements for self-employed individuals and landlords with turnover exceeding £50,000 in 2024/25. The first quarterly update will be due by 7 August 2026.
- An increase in the Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) rate to 18% with a lifetime limit of £1 million;
- Late filing penalties for Corporation Tax Returns are increasing to £200;
- The introduction of a new £2.5 million allowance applying to the combined value of qualifying business and agricultural property; and
- Capital Gains Tax annual exempt amount remains at £3,000.
Capital Gains Tax
The Office for Budget Responsibility have projected that receipts from CGT are expected to rise until 2030-31 “mainly” due to projected rises in equity prices in addition to changes to the Inheritance and Capital Gains Tax regimes announced in October 2024.
There was no explicit reference to Capital Gains Tax in Labour’s election manifesto, although speculation about potential reform has persisted for some time. The UK’s current CGT rates remain comparatively low by G7 standards, and no changes have been announced since October 2024.
For now, the position remains unchanged, although market speculation continues ahead of the 2026 Autumn Budget.
Inheritance Tax
Business Property Relief (BPR) and Agricultural Property Relief (APR) have historically provided up to 100% relief from Inheritance Tax (IHT) on qualifying business and agricultural assets.
From 6 April 2026, a new £2.5 million combined allowance will apply to the value of qualifying business and agricultural property for each individual, with relief available at 100% only up to this threshold. To the extent that qualifying assets exceed £2.5 million, relief will apply at 50% on the excess value.
In practical terms, this means assets above the £2.5 million threshold could be exposed to an effective 20% IHT charge.
Any unused amount of the £2.5 million allowance can be transferred to a surviving spouse or civil partner.
Making Tax Digital (MTD)
The introduction of quarterly reporting represents a significant administrative shift for many sole traders and landlords.
Although the change does not alter the timing of tax payments at this stage, it will require more frequent record-keeping and digital submissions. We will be in touch with those that will be affected by the change in the very near future.
Remuneration and dividend tax
With dividend rates increasing and the personal allowance frozen, the overall tax cost of profit extraction continues to evolve. A periodic review of salary, bonus, dividend and pension contribution strategy remains advisable to maintain tax efficiency.
Summary
While the Statement did not introduce any immediate tax planning opportunities, the approach of the tax year-end remains an important time to review your finances and ensure that available allowances and reliefs have been fully utilised.
The forecasts are somewhat uncertain, especially given recent events in the Middle East, which could shake things up and influence the decisions announced in the Autumn Budget.
Attention will now turn to said Budget, which will inevitably have rather more meat on the bone than this Statement.
As always, we will keep you updated should any further details emerge that may impact you. In the meantime, please do not hesitate to get in touch if you would like to discuss your individual circumstances.
