Chancellor Rachel Reeves delivered a measured Spring Statement focused on “security, stability and growth” amid global uncertainty and rising oil prices. There were no major new tax announcements, but several previously confirmed measures begin taking effect from April.
Making Tax Digital
Making Tax Digital for Income Tax begins is set to go ahead as previously confirmed from 6 April for many sole traders and landlords. Those with qualifying income of £20,000 or less will be automatically exempt, and certain groups have later start dates.
Corporation Tax penalties
From April 2026, late filing penalties for Corporation Tax returns will double. The initial fixed penalty increases from £100 to £200, with significantly higher penalties for repeated delays.
Freeze on personal tax thresholds continues, pushing more people over tax bands
Income Tax and National Insurance rates remain unchanged, but thresholds are frozen until 2030–31. As wages rise, more individuals will move into higher tax bands, increasing tax liabilities over time without headline rate rises.
Class 2 National Insurance
From 6 April, the Small Profits Threshold for sole traders will rise to £7,105. The weekly Class 2 National Insurance rate will be £3.65 for those choosing to make voluntary contributions.
Tax rates on dividends rise
From April, 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%.
Higher taxes on investment income
From April 2027, tax on savings interest and property rental income in England and Northern Ireland will also increase, with rates rising to 22%, 42% and 47% depending on the taxpayer’s band.
National Living Wage increases
From April:
- Age 21+: £12.71 per hour
- Age 18–20: £10.85 per hour
- Under 18s & apprentices: £8 per hour
Around 2.7 million workers will benefit, while employers face higher wage and associated employment costs.
Business rates
Business rates are changing across England, Scotland, Wales and Northern Ireland, with Northern Ireland confirming a 3% increase for non-domestic properties. Relief schemes continue in various forms, particularly for retail, hospitality and leisure businesses.
From April, business rates bills in England, Wales and Scotland will be updated to reflect changes in property values since the last revaluation in 2023. This may mean increased bills for some businesses whose property has increased in value.
Support for small businesses: apprenticeships
The government is rolling out a £725 million package to support small businesses in England with fully funded apprenticeships for eligible under-25s. Elements of the scheme begin from April.
Economic outlook
The latest forecasts from the Office for Budget Responsibility show:
- Growth in 2026: 1.1% (downgraded)
- Growth in 2027–28: 1.6%
- Growth in 2029–30: 1.5%
- Unemployment peak: 5.3% this year, falling to 4.1% by 2030
- Inflation: currently around 3%, expected to return to 2% in late 2026
However, rising oil prices linked to geopolitical tensions could push inflation higher than forecast.