March 2026 Spring Statement Summary

Chancellor of the Exchequer, Rachel Reeves, delivered the Spring Statement on Tuesday 3 March 2026. The government has been keen to have only one tax event per year (the Budget) and so the Spring Statement was intended to provide an interim update on the economy and public finances and provide reassurance to the business community.

The main message the Chancellor wished to convey was that current policies mean that the government has the right economic plan for Britain. The Chancellor stated that the ‘…Spring Forecast has shown that the government’s economic plan to cut the cost of living, cut national debt and grow the economy, is the right one.’

Whilst the speech was highly political, the Chancellor specifically referred to three particular areas to show that the government’s policies were working: 

• Cutting the cost of living - the OBR’s forecast shows inflation, borrowing and debt interest are falling, whilst investment is rising.
• Cutting borrowing - the OBR’s forecast shows borrowing is down by nearly £18 billion compared to the autumn, with borrowing this year set to be the lowest in six years and falling below the G7 average.  
• Growing the economy - the OBR’s forecast shows GDP per person is now set to grow more than was expected in the Budget, with growth of 5.6% over the parliament.

So does this mean even more tax rises? It certainly does not appear that tax cuts are on the way anytime soon and in fact the OBR expect the tax-to-GDP ratio is forecast to increase to a post-war high of 38% of GDP in 2030/31.

Of course, the Spring Forecast is exactly that; for example, the effects of the current situation in the Middle East have not been factored into any of the data released by the OBR.

Our summary

Over the next few articles, we will focus on summarising the main tax measures coming into force in the next tax year  which may affect you, your family or your business. To help you decipher what was said we have included our own comments. You should contact us before taking any action as a result of the contents of this summary, or if you need any further help or support.

Private Clients

Income Tax

The personal allowance

The Income Tax personal allowance is fixed at the current level of £12,570 and will remain frozen until April 2031. There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000. The reduction is £1 for every £2 of income above £100,000. This means that there is no personal allowance where adjusted net income exceeds £125,140.

The government will increase the married couple’s allowance and blind person’s allowance from 6 April 2026 by the CPI rate for September 2025 of 3.8%. These become £11,700 and £3,250 respectively.

Tax bands and rates 

The basic rate band remains at £37,700, with the higher rate threshold remaining at £50,270. The additional rate threshold remains at £125,140. The freeze of these thresholds will continue until April 2031. 

The additional rate for non-savings and non-dividend income will apply to taxpayers in England, Wales and Northern Ireland. The additional rate for savings and dividend income will apply to the whole of the UK.

The freezing of tax thresholds results in ‘fiscal drag’ where rising levels of income bring ever greater numbers of taxpayers into the tax system or into higher rates of tax.

Tax on property income 

Property income is any income from letting land and buildings. Individuals have a Property Allowance. This exempts property income of £1,000 or less. Property income over £1,000 can be offset either by the £1,000 Property Allowance or by deducting relevant expenses. 

The government is introducing the following separate tax rates for property income from 2027/28:

• 22% for basic rate taxpayers
• 42% for higher rate taxpayers
• 47% for additional rate taxpayers.

It remains to be seen whether the Scottish and Welsh governments will follow suit by increasing taxes on property income in the future, as the government is devolving that power to those governments.

Tax on savings income

Savings income is income such as bank and building society interest.

The Savings Allowance applies to savings income and the available allowance in a tax year depends on the individual’s marginal rate of Income Tax. Broadly, individuals taxed at up to the basic rate of tax have an allowance of £1,000. For higher rate taxpayers the allowance is £500. No allowance is due to additional rate taxpayers.

Savings income within the allowance still counts towards an individual’s basic or higher rate band and so may affect the rate of tax paid on savings above the Savings Allowance.

Some individuals qualify for a 0% starting rate of tax on savings income up to £5,000. This will remain at £5,000 until 5 April 2031. However, the rate is not available if taxable non-savings income (broadly earnings, pensions, trading profits and property income, less allocated allowances and reliefs) exceeds £5,000.

The current tax rates on savings income will be maintained for 2026/27. From 6 April 2027, there will be a 2% increase in the applicable tax rates. The basic rate will increase to 22%, the higher rate will increase to 42% and the additional rate will increase to 47%.

These rules apply to the whole of the UK.

Tax on dividends

Currently, the first £500 of dividends is chargeable to tax at 0% (the Dividend Allowance). This £500 is retained for 2026/27.

From 6 April 2026, there will be a 2% increase in the ordinary and upper rates of Income Tax applicable to dividends. The additional rate will remain unchanged at 39.35%.

Dividends received above the Dividend Allowance will be taxed at the following rates for 2026/27:

• 10.75% for basic rate taxpayers
• 35.75% for higher rate taxpayers
• 39.35% for additional rate taxpayers.

Dividends within the allowance still count towards an individual’s basic or higher rate band and so may affect the rate of tax paid on dividends above the Dividend Allowance.

When working out which tax bands apply to dividends, they are treated as the last type of income to be taxed.

These rules apply to the whole of the UK.

There had been some speculation before the Budget about charging National Insurance contributions on investment income. Increasing rates on dividend income is a similar way of raising revenue. Unlike National Insurance contributions, though, it will affect those over state retirement age. In addition, tax computations will become increasingly complex.

Next steps

As always, these articles provide an overview of the various measures available, and no action should be taken without seeking professional advice.  At Ritchie Phillips, we pride ourselves on providing clear, pragmatic advice to help businesses, individuals and families. If you’d like to discuss any of the above, please get in touch.