Holding the line on taxes in a stability-first Spring Statement

Reeves has already indicated she wants to “do as little as possible” in this Statement, the aim being stability over surprise. The Government has said the Statement won’t assess performance against the fiscal mandate, which means a holding of the line with no big tax-and-spend fireworks. Predictability is the headline.

Instead, we should expect a focus on economic forecasts centred on the anticipated OBR publication of projections for growth, inflation, unemployment and public finances, setting the tone for an anticipated economic narrative.

Shortly after taking office in 2024, the new administration vowed to deliver only one major fiscal event per year (the Autumn Budget). It appears they will keep this promise with the upcoming Statement, avoiding sweeping policy changes and instead taking the opportunity to underpin themes of stability over spectacle. It seems they might be reading the tax-tired room.

A few pre statement announcements indicate we can expect pro-growth messages of support for small businesses, including the SME lending package – five major banks (Barclays, Lloyds Banking Group, NatWest, HSBC UK, and Santander UK) have agreed to an £11bn lending package to support small business investment, finalising the agreement with the government at a Westminster roundtable last month; and business rates relief for pubs and music venues – a 15 per cent discount from April 2026, with no increases for two years.

This positive news will be framed as a major confidence signal for the UK economy, while providing a particular nod to the hospitality and cultural sectors.

The Chancellor will be looking to stress a stability-first statement which signals economic competence and a responsiveness to business concerns, while no doubt setting a silent stall for bigger autumnal decisions.

In spite of the imminent emphasis on economic stability, predictability, and long term planning, it is hard to ignore that there are still several tax related pressures and debates swirling around Westminster. Strong political pressure remains in favour of raising the state pension tax threshold, with campaigners seeking to double up to £25,140.

Reeves herself has indicated she doesn’t want full state pensioners dragged into tax, as the triple lock will push pensions above the current personal allowance threshold as early as next year. While it is unlikely we will hear any announcement on this in the Spring Statement, it might be something to keep an eye on for leafier times.

NICs are another area to watch with bated breath. With receipts surging and a record January surplus, the Treasury has more headroom. No doubt Reeves will exercise caution before altering NICs again, but this must surely be enough to tickle the Budgetary tastebuds.

So, as we finally spring toward some warmer climes (Is it still raining? I hadn’t noticed), it seems we can dare to dream that Reeves does not intend to spoil the fiscal weather. Commentators concur that this Spring Statement won’t be looking to introduce any new business tax increases: no changes to corporation tax, no new employer NIC rises, no VAT rate changes. But let’s not ignore in our complacency the already baked in ‘stealth’ tax rises: frozen thresholds, wealth-related measures and fiscal drag.

Let us also not rest on our laurels too long. 6 April marks the date for all those pesky, overt tax changes coming into force. Key changes include:-

• Making Tax Digital (MTD) for Income Tax - from 6 April 2026, self employed individuals and landlords with gross income over £50,000 (based on 2024/25 total qualifying income) will be required to keep digital records and submit quarterly updates to HMRC. Expected to affect around 780,000 people this year and a further 970,000 in 2027, this is a significant increase to the administrative burden for individuals and small businesses.

• Inheritance Tax (IHT) reforms – 6 April marks the advent of the biggest IHT shake-up in decades, with reduced relief, changes to gifting rules, new treatment for trusts and significant adjustments for land and business assets, especially agricultural property, set to materially affect succession planning for high net worth individuals and business owners. We will see Agricultural & Business Property Relief (APR/BPR) full relief restricted to a combined allowance of £2.5m (originally planned to be capped at £1m, but softened in December 2025), affecting and altering the IHT-landscape for many farmers and business owners, as well as trusts.

• Higher dividend tax - from April, the Government is increasing dividend tax rates by 2 per cent for basic-rate and higher rate taxpayers. The additional-rate of dividend tax will remain unchanged.

• Capital Gains Tax (CGT) on business assets - the CGT rate applied under Business Asset Disposal Relief will rise from 14 per cent to 18 per cent, following the increase from 10 per cent in 2025.

• Changes to benefit in kind rules - company car tax bands will increase by 1 per cent for most vehicles, including electric and low-emission. Company vans, fuel benefit and other employer-benefits are unchanged.

• Updates to work from home tax relief - employees will no longer be able to claim the flat rate work from home tax relief that has existed for years. This signals the end of the £6 per week (£312 per year) flat rate deduction and the employer paid £6 per week tax free allowance (unless strict conditions are met).

I think it is safe to say we can expect a Spring message of positivity from the Chancellor. But let us not walk blindly into the new tax year.

Further fiscal changes may not be announced but as Bill 377 (Finance (No. 2) Bill 2024–26) currently sits in the House of Lords, with Royal Assent to follow, by Summer we will be operating under a significantly reshaped tax framework – one that quietly tightens thresholds, adjusts reliefs, and embeds measures that will influence business and succession planning long after the headlines fade.

Happy stable March everyone!