Last week, the Chancellor, Rachel Reeves, delivered the government’s Spring Forecast alongside the latest outlook from the Office for Budget Responsibility (OBR). 

There were no new tax announcements, but the report gives us a useful glimpse into where the UK economy, and the tax system – may be heading over the next few years. 

Here’s a quick summary of the key points and what they could mean for you. 

What the forecast says 📉 

The OBR expects the UK economy to grow slowly but steadily over the next few years. 

Key predictions include: 

• 📉 Economic growth slowing slightly – GDP is expected to grow by 1.1% in 2026, before gradually improving later in the decade. 

• 👩‍💼 Unemployment rising slightly – expected to peak at around 5.3% in 2026 before falling again. 

• 💷 Government borrowing gradually falling over the coming years. 

• 📊 Tax levels staying high – the overall tax burden is expected to reach 38.5% of GDP by 2030, one of the highest levels seen in the UK in decades. 

One important point is that many of these forecasts were finalised as tensions in the Middle East escalated, so global events could still affect the outlook. 

What this means for taxpayers 💰 

While there were no new tax changes announced, the direction of travel is becoming clearer. 

Here are some of the themes emerging from the forecast: 

Frozen tax thresholds will keep increasing tax bills 📈 

Income tax thresholds are expected to remain frozen until April 2031. 

As wages rise, this means more people will: 

• move into higher tax bands 
• pay more tax overall 
• see their effective tax rate rise, even without a formal tax increase 

This effect is known as “fiscal drag.” 

The State Pension may become taxable for more people 👵 

From 2027–28, the State Pension is expected to exceed the personal allowance. 

This could bring: 

• around 600,000 additional people into income tax by 2026 – 27 
• potentially 1 million more taxpayers by 2030 – 31 

The government has said it does not intend pensioners living solely on the State Pension to pay tax, but the details of how this will work have not yet been confirmed. 

Businesses may feel continued cost pressure 🏢 

The OBR also notes that higher employer National Insurance contributions introduced last year are contributing to the overall tax take. 

For businesses, this may influence: 

• hiring decisions 
• staffing costs 
• remuneration planning 

Capital taxes could remain under the spotlight 📊 

The strong performance of UK equities means the OBR expects capital tax receipts to increase. 

This means taxes such as: 

• Capital Gains Tax 
• Inheritance Tax 
• property-related taxes 

may remain areas the government continues to monitor closely in future Budgets. 

What action might be worth considering ✔️ 

While nothing immediate has changed, the forecast reinforces the value of proactive tax planning. 

Some sensible steps could include: 

✔️ Reviewing your income and remuneration structure (salary, dividends and pensions). 

✔️ Making full use of available allowances before they reset each tax year. 

✔️ Reviewing investment portfolios, particularly if you hold shares with significant gains. 

✔️ Thinking ahead about succession and estate planning if you hold substantial assets. 

Small adjustments made early can often make a meaningful difference over time. 

Need a second opinion? 🤝 

If you would like to review your tax position or discuss planning opportunities, please do get in touch here. We would be very happy to help you make sure you’re making the most of the options available. 

Internet link: Spring Forecast 2026 press release 

Last week’s poll 🗳️ 

Cashflow Pressures 
Thank you to everyone who voted. 

The biggest challenge you told us about was overdue invoices, with many clients taking longer than expected to pay. 

Here are a few ways to help tackle this: 

📝 Clear invoicing – make sure all invoices are accurate, easy to read, and sent promptly. 
⏱️ Set payment terms – agree on deadlines upfront and remind clients politely as they approach. 
💬 Follow up regularly – a friendly check-in can often resolve delays before they become a problem. 
💡 Incentivise early payment – small discounts or perks for early settlement can make a difference. 
⚖️ Know when to escalate – for persistent delays, consider structured reminders or professional support. 

We hope these tips help you stay on top of cash flow and make overdue invoices less of a headache!