The Chancellor’s Spring Statement, presented to Parliament 3 March 2026, was packed with political content that has no real impact for UK taxpayers, business owners or employees. The substance of her presentation was a summary of the Office for Budget Responsibility (OBR) Economic and fiscal outlook released on the same date.

Our summary that follows highlights the main points of the OBR statement and adds our reflections on the possible effects these plans will have on future UK taxation policy.

It is also worth mentioning that if the present unrest in the Middle East continues, these forecasts may become untenable. 

What the OBR outlook means for you and future taxation

Following the Chancellor’s Spring Statement, the OBR has published its Economic and fiscal outlook: March 2026. While the document is technical, it provides an important signal about the direction of the UK economy and, crucially, the future shape of the tax system.

This briefing summarises the key items and explains what they may mean for individuals, business owners and investors over the next few years.

The wider economic picture

The OBR expects the UK economy to grow slowly in the near term, before improving modestly later in the decade. Economic growth is forecast to be around 1.1 per cent in 2026, rising to an average of around 1.6 per cent a year thereafter. This is weaker than historic norms and reflects long-standing issues such as low productivity, growth and an ageing workforce.

Inflation is expected to continue falling and move closer to the Bank of England’s 2 per cent target by late 2026. This should help ease pressure on household finances, but it also reduces the pace at which tax revenues naturally increase through wage and price growth.

The overall message is that the economy is stable, but not strong. That matters because government tax receipts depend heavily on economic growth.

The state of the public finances

Government borrowing is forecast to fall gradually over the coming years. Public sector borrowing is expected to decline from just over 5 per cent of GDP in 2024-25 to around 1.6 per cent of GDP by 2030-31. This improvement is largely driven by a high tax take and steady economic growth, rather than major reductions in public spending.

Public sector net debt remains high, stabilising at around 95 per cent of GDP. This is historically elevated and leaves the public finances sensitive to shocks such as higher interest rates or weaker growth.

For taxpayers, this matters because high debt limits the government’s room to cut taxes. Even modest economic setbacks could quickly put pressure back on borrowing.

What this means for future taxation

The OBR does not set tax policy, but its forecasts strongly influence government decisions. The outlook points to several important themes for future taxation.

First, the overall tax burden is expected to remain high. Tax receipts as a share of the economy are close to post-war highs and are forecast to stay there. This suggests that meaningful, broad-based tax cuts are unlikely in the near term.

Secondly, much of the recent increase in tax revenue has come from so-called fiscal drag. Income Tax thresholds have been frozen, meaning that as wages rise, more income is taxed at higher rates. Although inflation is easing, this effect will continue as long as thresholds remain unchanged.

For individuals, this means that effective tax rates may continue to rise even if headline rates do not change. More people are likely to be drawn into higher and additional rate bands over time.

Income Tax and National Insurance

The outlook reinforces the likelihood that Income Tax and National Insurance will remain the government’s most reliable sources of revenue. These taxes are broad-based, predictable and relatively difficult to avoid.

While large increases in headline rates appear unlikely, continued freezes to allowances and thresholds remain a realistic option. Over time, this increases the tax burden on earned income without the need for explicit tax rises.

For employees and directors, this underlines the importance of reviewing remuneration structures, including the balance between salary, dividends and pension contributions, to ensure tax efficiency within the rules.

Business taxation

Corporation Tax receipts remain strong following the increase in the main rate in recent years. The OBR forecasts suggest that business taxes will continue to play a significant role in supporting the public finances.

Given the constraints on public spending and the need for stable revenues, there may be limited appetite for significant reductions in business taxes. Instead, future changes are more likely to focus on reliefs, allowances and compliance measures.

Businesses should expect continued scrutiny of reliefs and incentives, alongside a focus on timely reporting and accurate tax compliance.

Capital taxes and wealth

Although the OBR does not focus heavily on capital taxes in this outlook, the broader fiscal context is important. High public debt and long-term spending pressures increase the likelihood of further reform to taxes on capital and wealth.

Capital Gains Tax, Inheritance Tax and property-related taxes are all areas where governments may seek additional revenue without raising Income Tax rates. This may take the form of rate changes, allowance reductions, or restrictions on reliefs rather than entirely new taxes.

For individuals with significant assets, this reinforces the importance of forward planning, particularly around asset disposals, succession and estate planning.

Long-term pressures and ageing

The OBR highlights the growing cost of an ageing population, particularly in relation to health, social care and pensions. These pressures increase over time and extend beyond the current forecast period.

Unless public spending is reduced or restructured, higher revenues will be required in the long term. This suggests that future tax policy will increasingly focus on sustainability rather than short-term incentives.

From a planning perspective, this points towards a tax environment where reliefs and allowances may become more restricted, and where long-term strategies are preferable to reactive decisions.

Uncertainty and risk

The OBR places significant emphasis on uncertainty. Geopolitical risks, energy prices, productivity trends and labour market changes could all materially affect the outlook.

If the economy underperforms, the government may need to respond quickly. Historically, this has often involved tax measures introduced at relatively short notice. This reinforces the value of regular reviews and keeping tax planning flexible.

What clients should take away

The key message from the OBR outlook is not that major tax rises are imminent, but that the scope for tax cuts is limited. The UK is likely to remain a relatively high-tax economy for the foreseeable future.

Incremental changes, rather than dramatic reforms, are the most likely path. Threshold freezes, relief adjustments and targeted measures are expected to remain central tools of tax policy.

For individuals and businesses, this makes proactive planning essential. Understanding how existing rules apply, making use of available reliefs, and reviewing structures regularly can make a meaningful difference over time.

If you would like to discuss how these trends may affect your personal or business circumstances, we would be happy to help you review your position and plan ahead.

The Additional State Pension is only available to those who reached the state pension age before 6 April 2016 and are receiving the Old State Pension. The Additional State Pension is an extra amount of money paid on top of the basic Old State Pension.

The Old State Pension is designed to provide individuals of state pension age with a basic regular income and is based on National Insurance Contributions (NICs). To get the full basic State Pension, most people need to have had 35 qualifying years of NICs.

Claimants will automatically have received the Additional State Pension if they were eligible for it. Those who had contracted out were not eligible for the Additional State Pension.

If your spouse or civil partner dies, you may be able to inherit some of their Additional State Pension if you reached State Pension age before 6 April 2016. If you do not receive the full basic State Pension, you may be able to increase it by using your spouse or civil partner’s qualifying National Insurance years.

You may also be able to inherit part of their Additional State Pension or Graduated Retirement Benefit. Different rules apply if you reached State Pension age on or after 6 April 2016. If relevant, you should contact the Pension Service to check what you can claim.

If you have not yet checked whether you need to use Making Tax Digital (MTD) for Income Tax, you should do so urgently. HMRC has issued a timely reminder that for many self-employed and landlords the way to report tax to HMRC will change significantly from 6 April 2026.

MTD for Income Tax is a significant move away from the traditional annual self-assessment process towards a more digital and frequent approach, requiring taxpayers to manage records and submit updates through recognised software. The new system is being gradually rolled out over the coming years.

More than 860,000 sole traders and landlords earning over £50,000 from self-employment or property need to start using digital reporting from April 2026. MTD for Income Tax requires users to keep digital records and send quarterly updates of income and expenses. These updates are not additional tax returns and are created by recognised and approved software providers. A full tax return will still be required by the following 31 January after the tax year, i.e., the first MTD tax return, covering the 2026-27 tax year, will be due by 31 January 2028.

HMRC’s Director of Making Tax Digital, said:

‘With two months to go until MTD for Income Tax launches, now is the time to act. A range of software is available, and the system is straightforward and helps reduce errors. Thousands of volunteers have already used it successfully.

This will make it easier for sole traders and landlords to stay on top of their tax affairs and help ensure everyone pays the right amount of tax.

Spreading your tax admin throughout the year means avoiding that last minute scramble to complete a tax return every January. Go to GOV.UK and start preparing today.’

Taxpayers joining MTD for Income Tax in April 2026 will not receive penalty points for late quarterly updates for the first 12 months, giving time to adjust. There are also exemptions available for those who genuinely cannot use digital tools.

We would be happy to help if you need assistance getting started with MTD for Income Tax.

National Insurance credits can help qualifying applicants to fill contribution gaps in their National Insurance record. This can help taxpayers increase their number of qualifying National Insurance years, which may increase the number of benefits they are entitled to, such as the State Pension.

This could happen if someone was:

• employed but had low earnings
• unemployed and were not claiming benefits
• getting National Insurance credits for less than a full tax year
• self-employed but did not pay contributions because of small profits
• living or working outside the UK.

National Insurance credits are available in certain situations where people are not working and therefore, not paying National Insurance contributions. For example, credits may be available to those looking for work, who are ill, disabled or on sick pay, on maternity or paternity leave, caring for someone or on jury service.

Depending on the circumstances, National Insurance credits may be applied automatically or an application for credits may be required. There are two types of National Insurance credits available, either Class 1 or Class 3. Class 3 credits count towards the State Pension and certain bereavement benefits whilst Class 1 covers these as well as other benefits such as Jobseeker’s Allowance.

Taxpayers may also be able to pay voluntary Class 2 or Class 3 National Insurance contributions to protect their entitlement to the State Pension (and in some cases other benefits) if they meet the eligibility requirements. You can only pay voluntary National Insurance contributions to fill gaps for the previous six tax years. The deadline to make payment is 5 April each year. For example, you have until 5 April 2031 to pay voluntary contributions to make up a gap for the 2024-25 tax year.

1 March 2026 – Due date for Corporation Tax due for the year ended 31 May 2025.

2 March 2026 – Self-Assessment tax for 2024-25 paid after this date will incur a 5% surcharge unless liabilities are cleared by 1 April 2026, or an agreement has been reached with HMRC under their time to pay facility by the same date.

19 March 2026 – PAYE and NIC deductions due for month ended 5 March 2026 (If you pay your tax electronically the due date is 22 March 2026).

19 March 2026 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2026. 

19 March 2026 – CIS tax deducted for the month ended 5 March 2026 is payable by today.

1 April 2026 – Due date for corporation tax due for the year ended 30 June 2025.

19 April 2026 – PAYE and NIC deductions due for month ended 5 April 2026. (If you pay your tax electronically the due date is 22 April 2026).

19 April 2026 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2026. 

19 April 2026 – CIS tax deducted for the month ended 5 April 2026 is payable by today.

30 April 2026 – 2024-25 tax returns filed after this date will be subject to an additional £10 per day late filing penalty for a maximum of 90 days.

If you are self-employed, it is important to understand which car and travel costs can be claimed.

You can claim allowable business expenses for car, van, or travel costs, which reduce your taxable profit. Typical allowable costs include:

• Vehicle insurance
• Repairs and servicing
• Fuel
• Parking
• Hire charges
• Vehicle tax and licence fees
• Breakdown cover
• Train, bus, tram, air, and taxi fares
• Hotel rooms
• Meals on overnight business trips

You cannot claim for:

• Non-business driving or travel costs
• Fines or penalty charges
• Personal travel, including commuting between home and a regular workplace, is generally not allowable.

For vehicle costs, you may choose between claiming actual costs or using HMRC’s simplified expenses which is a flat-rate allowance for mileage.

If you buy a vehicle for your business, how you claim the cost depends on your accounting method. Under traditional accounting, you can claim capital allowances on the purchase cost. If you use cash basis accounting, you can also claim capital allowances as long as you are not using simplified expenses. For all other types of vehicles or associated costs, you can claim them as allowable business expenses.

Over the past week, one topic has dominated discussion among UK businesses, rising employment costs and the difficult decisions they are forcing on employers. This issue is particularly visible in the retail and hospitality sectors, but the underlying pressures apply across much of the economy.

Employers are facing a combination of higher National Living Wage rates, increased National Insurance costs, and wider employment compliance obligations. While each individual change may appear manageable, together they represent a significant increase in the cost of employing staff. For labour intensive businesses operating on tight margins, this can quickly become unsustainable.

Recent commentary has highlighted that many retailers are responding by cutting staff hours, delaying recruitment, or in some cases reducing headcount altogether. These are rarely decisions taken lightly. For many business owners, staff are their largest single cost and also their most valuable asset. However, when wage bills rise faster than turnover, something has to give.

Beyond direct wage costs, there is also growing concern about employment law complexity and reduced flexibility. Employers are increasingly cautious about taking on permanent staff, particularly where demand is uncertain. This has knock on effects for productivity, staff morale, and long term growth planning.

For business owners, the challenge is not just about cost control, but about sustainability. Short term fixes such as reducing hours may protect cash flow, but they can also affect service quality and customer experience. In competitive markets, this can be risky.

From an advisory perspective, these pressures reinforce the importance of forward planning. Regular management accounts, cash flow forecasting, and scenario modelling can help businesses understand the impact of rising employment costs before problems become acute. In some cases, restructuring roles, investing in systems, or adjusting pricing may be more effective than across the board cost cutting.

The wider debate also raises policy questions about how employment costs are shared between employers, employees, and the state. For now, however, business owners must deal with the reality in front of them. Rising employment costs are not a theoretical issue, they are already shaping staffing decisions across the UK economy.

The UK Government has launched a new campaign urging businesses to strengthen their defences against cybercrime, reflecting growing concern about the scale and cost of online attacks on UK firms. The announcement, published on gov.uk this week, has attracted strong interest from business owners, particularly small and medium sized enterprises that may lack dedicated IT or cyber security resources.

Cybercrime remains a material business risk

Cyber threats are no longer limited to large organisations. Recent government data shows that a significant proportion of small businesses experience cyber incidents each year, ranging from phishing attacks and ransomware to data breaches and system disruption. While some incidents are minor, others can have serious financial and reputational consequences, particularly where customer data is compromised or trading activity is interrupted.

For many owner-managed businesses, the real risk lies not only in the immediate cost of dealing with an attack, but also in lost productivity, delayed invoicing, strained customer relationships, and increased insurance costs.

Practical steps promoted by the campaign

The government campaign focuses on simple, practical actions that businesses can take to reduce their exposure to cyber risks. These include keeping software and systems up to date, using strong passwords and access controls, backing up data regularly, and ensuring staff are aware of common cyber threats.

A key element of the guidance is encouraging businesses to work towards Cyber Essentials certification. This is a government-backed standard that helps organisations put basic technical controls in place and demonstrates to customers and suppliers that appropriate safeguards are being taken.

Financial implications for business owners

From a financial planning perspective, cyber security is increasingly relevant. A serious cyber incident can place unexpected strain on cashflow, disrupt trading, and force businesses to divert funds away from growth or investment plans. In extreme cases, it can threaten the long-term viability of the business.

Lenders, insurers and commercial partners are also paying closer attention to cyber risk management. Businesses that can demonstrate good controls may find it easier to secure finance, insurance cover, or new contracts.

An opportunity for proactive review

This government announcement provides a useful prompt for business owners to review their current systems and processes. It also creates an opportunity for advisers to raise cyber risk as part of wider business planning discussions, alongside cashflow management, insurance, and resilience planning.

As cybercrime continues to evolve, taking sensible preventative steps now can help protect both the financial health of the business and the peace of mind of its owners.

Today the Office for National Statistics confirmed that UK inflation has fallen to 3.0 per cent in the year to January 2026, the lowest rate seen in about ten months and down from 3.4 per cent in December. This brings good news for households and businesses dealing with high costs, particularly as it follows a period of elevated inflation and cost-of-living pressures. 

Likely reaction from Bank of England

Inflation is measured by the Consumer Prices Index and it remains above the Bank of England’s 2 per cent target, but the recent decline, driven by slower increases in food and petrol prices, has strengthened market expectations that monetary policy could soon ease. 

For businesses and their advisers one of the key questions this week is how this will affect interest rates. The Bank Rate currently stands at 3.75 per cent, where it was held at the last Monetary Policy Committee meeting. At that meeting policymakers emphasised the need to be confident inflation stays near target before cutting, but they also pointed to the likelihood of further reductions this year if data continue in the right direction

Will interest rates fall?

With inflation now on a clearer downward path and officials forecasting a return to the 2 per cent target by spring, futures markets are pricing in a strong chance of a rate cut at the Bank of England’s next decision in March. Many economists expect a 25 basis point reduction, potentially taking the Bank Rate down to around 3.5 per cent, and some see scope for further cuts later in the year if price pressures continue to ease. 

For clients with borrowing or refinancing plans this shift could mean slightly cheaper credit costs and a more supportive environment for investment decisions in the months ahead. If inflation continues to moderate as expected, both households and businesses may start to benefit from lower interest rate settings before long.

Many UK businesses are trading through a period of prolonged economic uncertainty. Costs remain high, consumer confidence is fragile, and access to finance is tighter than it was only a few years ago. In this environment, protecting cash flow and maintaining adequate cash reserves has become more important than chasing short term growth or headline profits.

Profit does not pay the bills

It is easy to focus on profitability when reviewing business performance, but profit and cash are not the same thing. A business can appear profitable on paper while still struggling to meet day to day commitments. Slow paying customers, rising stock levels, or large tax liabilities can all drain cash even when sales look healthy.

Cash flow is what keeps wages paid, suppliers onside, and tax deadlines met. When cash becomes tight, decision making often becomes reactive. This is when businesses are most likely to take on expensive finance, miss opportunities, or make rushed decisions that create longer term problems.

Why cash reserves matter more now

Cash reserves provide breathing space. They allow business owners to absorb short term shocks such as a late paying customer, a sudden increase in costs, or an unexpected tax bill. In a more volatile economy, these shocks are becoming more common rather than exceptional.

Holding reserves also gives businesses options. It allows time to renegotiate contracts, adjust pricing, or change direction without immediate pressure. Businesses with no buffer often find themselves forced into decisions by external events rather than making deliberate choices.

Managing uncertainty and confidence

Economic uncertainty affects behaviour. Customers may delay spending, lenders may be more cautious, and suppliers may tighten credit terms. All of this places additional strain on cash flow at exactly the wrong time.

Strong cash management helps restore confidence. Business owners who understand their cash position are better placed to plan, communicate with stakeholders, and spot issues early. This is not about pessimism, but realism. Preparing for slower periods is a sensible response to uncertainty, not a sign of weakness.

Practical steps to protect cash

Protecting cash flow often starts with small, practical actions. Reviewing payment terms, tightening credit control, and monitoring cash forecasts regularly can make a significant difference. Planning for tax liabilities in advance and setting funds aside reduces the risk of unpleasant surprises.

In uncertain times, cash is more than just a number on the balance sheet. It is resilience, flexibility, and peace of mind. Businesses that prioritise cash flow and build sensible

reserves are better equipped to weather current difficulties and put themselves in a stronger position for recovery when conditions improve.