The MGroup’s Spring Statement 2026 Summary
The Chancellor presented the Spring Statement to Parliament on 3 March 2026. Much of the announcement focused on political context rather than measures that directly affect UK taxpayers, business owners or employees.
The main substance of the statement was a summary of the Office for Budget Responsibility (OBR) Economic and fiscal outlook, released on the same date.
Our summary below highlights the key points from the OBR outlook and considers what they may mean for future UK taxation policy.
It is also worth noting that ongoing geopolitical tensions, particularly in the Middle East, could affect these forecasts if instability continues.
What the OBR outlook means for future taxation
Following the Spring Statement, the OBR published its Economic and fiscal outlook: March 2026. Although the document is technical, it gives a clear signal about the direction of the UK economy and the possible shape of future tax policy.
You can read more about UK government economic policy and taxation on the GOV.UK site.
The points below summarise the main themes and 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 reach around 1.1 percent in 2026, rising to an average of around 1.6 percent per year thereafter. This remains weaker than historic norms and reflects longer term challenges 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 percent target by late 2026. Lower inflation should ease pressure on household finances. However, it also slows the rate at which tax revenues naturally increase through wage and price growth.
As Ollie Squire, Partner at The MGroup, explains:
“The key takeaway from the outlook is stability rather than strong growth. For business owners that means planning becomes even more important, because tax policy tends to tighten when economic growth remains modest.”
The overall message is clear. The economy appears stable, but it is not particularly strong. Government tax receipts depend heavily on economic growth.
The state of the public finances
Government borrowing should fall gradually over the coming years.
Public sector borrowing is forecast to decline from just over 5 percent of GDP in 2024 to 2025 to around 1.6 percent of GDP by 2030 to 2031. This improvement relies mainly on a high tax take and steady economic growth rather than major reductions in public spending.
Public sector net debt remains high and is expected to stabilise at around 95 percent of GDP.
According to Jordan Lyne, Partner at The MGroup:
“When public debt remains high, governments tend to rely on steady tax revenues rather than introducing large tax cuts. Businesses should expect stability in the system but also continued scrutiny around compliance and reporting.”
For taxpayers, high debt limits the government’s room to reduce taxes.
What this means for future taxation
The OBR does not set tax policy, but its forecasts strongly influence government decisions.
Several themes appear likely to shape future taxation.
First, the overall tax burden remains high. Tax receipts as a share of the economy sit close to post war highs and are expected to stay there.
Second, much of the recent increase in tax revenue comes from fiscal drag. Income Tax thresholds remain frozen. As wages rise, more income moves into higher tax bands.
You can find the latest information on Income Tax rates and thresholds here.
For individuals, this means effective tax rates may continue to increase even if headline tax rates stay the same.
Income Tax and National Insurance
Income Tax and National Insurance remain the government’s most reliable sources of revenue.
These taxes are broad based and predictable. They are also difficult to avoid compared with other forms of taxation.
Large increases in headline rates appear unlikely in the short term. However, continued freezes to allowances and thresholds remain possible.
Wendy Tatham, Partner at The MGroup, notes:
“Frozen thresholds can quietly increase the tax burden over time. Many individuals are surprised when they move into higher tax bands simply because their income has increased with inflation.”
For employees and company directors, this highlights the importance of reviewing remuneration structures regularly. The balance between salary, dividends and pension contributions can make a significant difference to tax efficiency.
Business taxation
Corporation Tax receipts remain strong following the increase in the main rate in recent years.
The OBR forecasts suggest business taxes will continue to support the public finances. Given the constraints on government spending and the need for stable revenues, significant reductions in business taxes appear unlikely.
Instead, future changes may focus on reliefs, allowances and compliance measures.
Businesses should expect continued scrutiny of tax reliefs and incentives alongside a focus on accurate reporting and timely compliance.
Capital taxes and wealth
The OBR outlook does not focus heavily on capital taxes. However, the wider fiscal context remains 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 may therefore face adjustments over time.
For individuals with significant assets, forward planning remains important, particularly around asset disposals, succession and estate planning.
Long term pressures and an ageing population
The OBR also highlights the long term impact of an ageing population.
Costs related to healthcare, pensions and social care will continue to rise over time. These pressures extend beyond the current forecast period.
Unless spending is reduced or restructured, governments will require higher revenues in the long term. Future tax policy may therefore focus more on sustainability than short term incentives.
Uncertainty and economic risk
The OBR places strong emphasis on uncertainty.
Geopolitical tensions, energy prices, productivity trends and labour market changes could all affect the outlook.
If economic performance weakens, governments may need to respond quickly. Historically, this has often led to tax measures introduced at short notice.
For businesses and individuals, this reinforces the value of regular reviews and flexible tax planning.
What clients should take away
The key message from the OBR outlook is not that major tax rises are imminent. However, the scope for tax cuts appears limited.
The UK is likely to remain a relatively high tax economy for the foreseeable future.
Incremental changes rather than dramatic reforms appear more likely. Threshold freezes, adjustments to reliefs and targeted measures may continue to shape tax policy.
For individuals and businesses, proactive planning remains important. Understanding current rules, using available reliefs and reviewing structures regularly can make a meaningful difference over time.
Inflation falls to 3 percent
The Office for National Statistics recently confirmed that UK inflation fell to 3.0 percent in the year to January 2026, down from 3.4 percent in December.
Inflation in the UK is measured using the Consumer Prices Index (CPI):
Possible impact on interest rates
Although inflation remains above the Bank of England’s 2 percent target, the recent decline has strengthened expectations that monetary policy may soon ease.
The Bank Rate currently stands at 3.75 percent. Policymakers have indicated that rate reductions may follow later this year if inflation continues to fall.
Many economists expect a 25 basis point reduction, which could bring the Bank Rate down to around 3.5 percent.
For businesses and individuals considering borrowing or refinancing, this could mean slightly lower borrowing costs and a more supportive investment environment during the coming months.
If you would like to discuss how these developments may affect your personal or business finances, contact The MGroup to find out more about our accountancy services.
