Spring Statement 2026: the lowdown for you and your clients

Chancellor Rachel Reeves issued a steady-as-she-goes Spring Statement set against growing uncertainty caused by the conflict with Iran and rising oil prices.

Focusing her speech on the need “for security, for stability and growth”, the Chancellor made no major new policy announcements. However, your clients will have lots of change to contend with from next month as many of the policy changes from the Autumn Budget come into force - including rising minimum wages, frozen personal tax thresholds and changing business rates.

The Office for Budget Responsibility (OBR) downgraded predicted growth for the UK economy in 2026 from 1.4% to 1.1%. But the updated growth forecasts are 1.6% for 2027 and 2028 and 1.5% for 2029 and 2030. Unemployment is expected to peak at 5.3% this year and then fall gradually to 4.1% by 2030. According to the OBR’s latest predictions, inflation will hit the government’s 2% target in late 2026, down from the current rate of 3%.

But none of the OBR’s predictions have taken into account the potential impact of the latest conflict in the Middle East. Oil prices have already risen to the highest level in a year, which could have a knock-on effect on inflation.

While the Chancellor announced no new policies in today’s speech, there are a raft of changes coming into effect in April which will have an impact on your clients. Here are our key takeaways and reminders.

Freeze on personal tax thresholds remains, pulling more into higher tax bands

In November, the Chancellor confirmed that headline Income Tax and National Insurance (NI) rates on earned income would not change. That remains the case. However, the current freeze on Income Tax and NI thresholds will also stay in place until 2030-31. When the thresholds at which people pay different rates of Income Tax and National Insurance stay static rather than rising with inflation, this creates fiscal drag, as more people are pulled into paying higher rates over time as their wages rise with inflation. 

You can see the current rates and thresholds on our UK tax rates tracker page including rates for Scotland, which sets its own bands. The Scottish Government recently confirmed its budget which will mean changes to Income Tax thresholds from April. 

Changes to Class 2 National Insurance

As previously announced, the Small Profits Threshold - the profit level below which sole traders can opt to pay Class 2 NI contributions voluntarily - will increase to £7,105, with the rate of Class 2 NI being £3.65 per week, from 6th April.

National Living Wage and National Minimum Wage rise

From April, the minimum wage for those aged over 21 (the National Living Wage) will rise to £12.71 an hour - an increase of 50p. For under-18s and apprentices, the National Minimum Wage rate rises to £8 and for 18 to 20-year-olds it rises to £10.85. Businesses will have to factor in the resulting pay rises for nearly 2.7 million eligible workers.

Free apprentices for small businesses in England

In November, the Chancellor announced plans to help small businesses to take on young apprentices, with fully funded apprenticeships for eligible people under 25. More details of the £725m package were announced in December and some elements of the scheme start rolling out from April. 

Business rates changing across the UK

The business rates multiplier - the figure used to calculate the amount of business rates a non-domestic property owner must pay - will change across the UK. Here are the updated rates for England, Scotland and Wales. In Northern Ireland, rates vary by council area. The Executive has confirmed an increase of 3% for non-domestic properties in Northern Ireland.

Each of the UK nations has also put in place initiatives to help support small businesses and those from specific sectors. In England, small businesses and those from the retail, hospitality and leisure (RHL) sector will benefit from special rates (see our November Budget blog for details). In Scotland, smaller RHL businesses will be eligible for 15% relief. Wales will move from having two rates multipliers to five new bands, based on property type and rateable value. This list details the support available in Northern Ireland.

Tax rates on income from assets rising

The government also announced plans to increase tax on income from certain assets, including property, shares and savings, some of which will come into effect from April 2026.  

Tax on assets: what’s changing and when? 

Dividends: from April 2026 there will be a 2% increase to the basic and higher rates of Income Tax on dividend income taking them up to 10.75% and 35.75% respectively. The additional rate remains unchanged at 39.35%.

Savings: from April 2027 there will be a 2% increase to basic, higher and additional tax rates of Income Tax on interest income -  this will take them up to 22%, 42% and 47% respectively.

Property: the government is creating separate tax rates for property income, similar to those that already exist on savings and dividend income. From April 2027 there will be a 2% increase to basic, higher and additional tax rates of income tax on property rental income - this will take them up to 22%, 42% and 47% respectively. This will apply to England and Northern Ireland. The government will engage with the devolved governments of Scotland and Wales to provide them with the ability to set property income rates in line with their current Income Tax powers.

Changes to capital allowances 

From 1st January 2026, a 40% first-year allowance on main rate expenditure was introduced - including most expenditure on assets for leasing, and expenditure by unincorporated businesses. From 1st April 2026 for Corporation Tax and 6th April 2026 for Income Tax, main rate writing-down allowances will reduce from 18% to 14%.

Increases to Corporation Tax late filing penalties

From 1st April 2026, HMRC is doubling fixed penalties for late Corporation Tax returns 

The penalty will double for taxpayers submitting a Corporation Tax return late from 1st April 2026. This means initial penalties rise from £100 to £200, with further penalties for 3-month delays increasing to £400. Repeat offenders face a fine of up to £2,000 for three successive late filings. You can find more information in the government’s policy paper.

Expansion of Enterprise Management Incentives

From April,  there will be an increase in company eligibility limits for the Enterprise Management Incentives (EMI) scheme to allow scale-ups to join start-ups in offering tax-advantaged shares to the talent they need to grow. The government will increase the employee limit to 500, the gross assets test to £120 million and the company share option limit to £6 million. The maximum holding period will increase to 15 years including in respect of existing EMI contracts.

Venture Capital and Enterprise Investment

The government is also increasing the Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) investment limit to £10 million, and to £20 million for Knowledge Intensive Companies (KICs). There will also be an increase in the lifetime company investment limit to £24 million, £40 million for KICs. The gross assets test will increase to £30 million before share issue, and £35 million after, from April 2026. Alongside this, the VCT income tax relief will decrease to 20%.

MTD for Income Tax 

Today’s speech was the last chance saloon for any rethink or delay in HMRC’s changes to how most sole traders and landlords will report their income and expenses. Making Tax Digital (MTD) for Income Tax is set to go ahead as previously confirmed, starting from 6th April. Some changes that were announced in November’s Budget and in subsequent guidance will come into effect. 

Potential change to payment deadline

The government said in November’s Budget that it “will require 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”. The government is due to publish a consultation this year on delivering this change, and on “timelier tax payment for those with only Self Assessment income”. Whether this last sentence points towards quarterly payments against quarterly updates under MTD for Income Tax is yet to be clarified.

Changes to exemptions and start dates

The government also announced automatic exemptions and other types of exemptions from MTD for Income Tax for certain taxpayers and published more detail after November’s Budget.

Automatic exemptions apply to those whose qualifying income is £20,000 or less and those who do not have a National Insurance number.  

Others exempt from MTD for Income Tax include trustees, including charitable trustees or trustees of non-registered pension schemes.  

Certain taxpayer groups do not need to use MTD for Income Tax until the 2027 to 2028 tax year at the earliest. This includes, for example, those who claimed averaging relief in their 2024 to 2025 tax return (such as creative artists and farmers).

You can find out more about the OBR’s forecast for the UK economy in the full Economic and fiscal outlook report. We also have a blog post you can share with your clients on what the Spring Statement means for small businesses.