Spring Statement 2026: What businesses should be planning for now

Stuart Noakes, Partner and Head of Tax, Carpenter Box

Chancellor Rachel Reeves previously committed to limiting tax changes to one major fiscal event each year following her first Budget in October 2024. The Spring Statement on 3 March kept to that promise, with no new tax announcements.

Instead, it focused on the latest economic outlook from the Office for Budget Responsibility (OBR). The OBR has slightly reduced its forecast for UK economic growth in 2026 from 1.4% to 1.1%, although stronger growth is expected thereafter. Government borrowing is forecast to fall, but risks remain, including geopolitical instability and rising fuel prices.

Despite the lack of new announcements, a number of previously confirmed tax changes will take effect over the coming years which businesses should begin preparing for now.

Changes taking effect from April 2026

While headline tax rates remain unchanged, the continued freeze on income tax bands and allowances means many taxpayers will pay more as incomes rise. This “fiscal drag” is expected to generate significant additional revenue for the government.

Several specific tax changes will take effect from April 2026. Dividend tax rates will increase, with the basic rate rising from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%. Capital Gains Tax reliefs are also tightening, with the rate on gains qualifying for Business Asset Disposal Relief increasing to 18%, while the annual CGT exemption remains at £3,000.

Inheritance Tax reforms will also come into force. From April 2026, 100% relief for agricultural and business property will be limited to £2.5 million of qualifying assets, with 50% relief above that threshold. In addition, shares listed on the Alternative Investment Market and similar markets will qualify for only 50% relief.

The government is also continuing its move toward digital tax administration. From April 2026, Making Tax Digital for Income Tax will become mandatory for self-employed individuals and landlords with annual gross income above £50,000, requiring digital records and quarterly updates to HMRC.

Business taxation and investment

Businesses will see several changes affecting investment and compliance. From April 2026, the main rate writing-down allowance for capital allowances will fall from 18% to 14%, slowing the pace at which tax relief can be claimed where upfront allowances are not available. The £1 million Annual Investment Allowance remains unchanged, allowing immediate relief on qualifying plant and machinery.

Support for investment in innovative companies is also expanding. Limits within the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) regimes will increase, enabling larger companies to qualify and raise more investment. However, income tax relief for individuals investing in VCTs will reduce from 30% to 20%.

Corporation tax rates remain unchanged at 25% for larger companies and 19% for those with smaller profits. Penalties for late filing of corporation tax returns will double from April 2026.

Business rates and employment costs

The next business rates revaluation will take effect from April 2026, based on property rental values as at April 2024. A new system of five multipliers based on property value and sector will be introduced. Transitional relief will cap annual increases, helping businesses manage significant rises in rates bills following revaluation.

Employment costs remain another key consideration. Employer National Insurance increases introduced in April 2025 continue to affect payroll costs, and the threshold above which employer NICs become payable is currently frozen until 2031.

Meanwhile, the National Living Wage will increase again from April 2026, rising to £12.71 per hour for workers aged 21 and over.

2027 and beyond

From April 2027, tax rates on savings and rental income will increase by two percentage points, taking the basic, higher and additional rates to 22%, 42% and 47% respectively. At the same time, unused pension funds and certain pension death benefits will be brought within the scope of inheritance tax, fundamentally changing long-standing estate planning strategies.

Changes to Individual Savings Accounts (ISAs) are also planned from April 2027, with a new restriction limiting the amount that can be invested in cash ISAs to £12,000 of the £20,000 annual allowance for most investors.

Further measures are planned later in the decade, including a new mileage-based duty for electric vehicles from April 2028, a High Value Council Tax Surcharge on residential properties worth over £2 million from the same year, and restrictions on pension contributions made through salary sacrifice arrangements from April 2029.

The government is also planning further digitalisation of the tax system, including a requirement for VAT invoices to be issued electronically by April 2029.

Planning ahead

With many of these measures taking effect over the next two to three years, early planning and professional advice will be essential to ensure that businesses and individuals remain well prepared for the evolving tax environment.

If you would like more detailed one-to-one advice on any of the above topics, you can get in touch with a member of our award-winning* tax team by calling 01903
234094 or visit

www.carpenterbox.com

*Carpenter Box were named national ‘Tax Team of the Year’ at the 2024 Accounting Excellence Awards.

Information correct as of 4 March 2026.