The Chancellor delivered the Spring Statement on the 3rd of March 2026. The government has aimed to limit major tax announcements to a single annual event: the Budget. Therefore, the Spring Statement was positioned primarily as an interim update on the state of the economy and public finances.
The Key Takeaways
While the Chancellor honoured the commitment not to introduce major tax announcements, the Statement still contained significant commentary on the broader economic outlook. A year earlier, the Statement had centred on commitments to increase defence spending, reduce welfare expenditure and stimulate economic growth. Over the past year, however, many of the proposed welfare cuts failed to gain support from backbench MPs, and economic growth has remained sluggish.
Stealth tax
Stealth tax is being placed on individuals to bring more into the scope of both the basic and higher rate tax.
This particularly impacts individuals who are retired or trying to grow their wealth.
Stealth taxes come in various forms, including indirect taxes like VAT, frozen tax thresholds, and lesser-known charges such as Insurance Premium Tax.
Personal Tax Allowance Freeze
As announced in late 2025, the Chancellor extended the period during which the personal allowance will be set at £12,570 and the higher rate threshold at £50,270 by three years, until April 2031.
The freezing of personal tax allowances and the higher-rate thresholds until April 2031 when combined with factors such as inflation, wage growth and the state pension triple lock, means that most taxpayers pay more in income tax.
As wages rise, more taxpayers will be pushed into the higher rate of tax over the next 5 years.
Tax Rises
The passive income tax rises for dividends and rental properties will encourage more people to go down the corporate route, such as FIC and property companies, in order to control their personal income tax rates.
The rise in Business Asset Disposal Relief to 18% means that business owners will only save £60,000 on the first £1 million of a business sale, which may stall potential sales.
Property Tax
Additionally, those looking at future planning of family businesses will be impacted by the Business Property Relief threshold from April 2026.
From the 6th of April 2026, the 100% Inheritance Tax (IHT) exemption for Business Property Relief (BPR) is capped at a combined value of £1 million for qualifying assets (including Agricultural Property Relief), per individual.
Summing Up
The Government presented the Spring Statement 2026 with an emphasis on three particular areas:
- Cutting the cost of living.
- Cutting borrowing.
- Growing the economy.
The OBR’s 125-page report stated that the fiscal context for the next Budget will remain challenging, which could indicate more tax rises.
Whilst the effects of the current situation in the Middle East have not been factored into any of the data released by the OBR, and there continues to be pressures on the government’s departmental spending plans, it certainly does not appear that tax cuts are on the way anytime soon.
We Can Help
Here at STS, we are here to support you through this changing landscape. By leveraging our expertise in tax compliance and planning, you can navigate the upcoming changes with confidence and clarity.
Don’t hesitate to reach out for a free initial consultation to explore how we can assist you in managing your tax implications effectively. Your financial well-being starts with informed decision-making and strategic planning.
