On 3 March 2026, the Chancellor, Rachel Reeves, delivered the Spring Forecast alongside fresh projections from the Office for Budget Responsibility.

The headline message? Economic stability has been restored. The subtext? The numbers still require a steady hand and possibly a strong cup of tea.

True to the government’s “one major fiscal event a year” promise, there were no shiny new tax rabbits pulled from the hat. However, the forecasts themselves tell a fairly clear story: tax as a share of GDP is heading towards 38.5% by 2030/31 — the highest level since the post-war era. Not exactly pocket change.

The Freeze That Keeps On Giving

Income tax thresholds remain frozen until April 2031. With wages rising, more people will drift into higher tax bands and not because they’re dramatically better off, but because inflation is doing the heavy lifting.

In other words, fiscal drag continues its quiet, efficient work.

State Pension vs Personal Allowance

From 2027/28, the state pension is expected to exceed the personal allowance. That could bring an estimated 600,000 more people into tax next year, rising to around one million by 2030/31.

The government has said pensioners whose only income is the state pension should not end up paying tax during this Parliament but the mechanics of how that promise will work are still to be confirmed. As ever, the detail matters.

Employer NIC & Hiring Pressure

The increase in employer National Insurance (introduced last April) continues to feed through the system. The OBR expects unemployment to peak at 5.3% in 2026 before easing back.

For businesses, this means payroll strategy remains firmly under the microscope.

Self Assessment & Overseas Income

Self assessment receipts are projected to rise sharply in 2026/27, partly due to the abolition of the non-domiciled regime and the temporary repatriation facility that followed.

If you have overseas income or assets, this is not the year for guesswork.

Capital Taxes Back In Focus

Strong recent performance in UK equity markets has boosted projected capital tax receipts. If you hold shares, now may be a sensible moment to review:

• Whether gains should be crystallised

• Portfolio rebalancing

• Use of available allowances

• The impact of ‘bed and breakfasting’ rules

Timing decisions here can quietly make, or cost, meaningful sums.

The Practical Takeaway

The overall direction of travel is clear: tax planning is becoming more important, not less. Reviewing pension contributions, dividend strategy, asset ownership structures and profit extraction methods now is considerably calmer than scrambling later.

Future-you will be grateful.

Making Tax Digital for Income Tax – The Countdown Is Real

From April 2026, Making Tax Digital (MTD) for Income Tax will apply to self-employed individuals and landlords with business and/or property income over £50,000 (that’s gross income, not profit).

HMRC estimate around 860,000 people will move into the regime.

What changes?

• Digital record-keeping becomes mandatory

• Quarterly updates to HMRC

• First quarterly submission due 7 August 2026

And yes, your normal 2025/26 tax return still needs to be filed by 31 January 2027. So there will be a brief period where both systems overlap. Consider it an administrative warm-up exercise.

If we’re not already working on your transition plan, now is the time.

Overpayment Relief – The Four-Year Window

Paid too much tax? It happens more often than you might think.

Generally, claims must be made within four years of the end of the relevant tax year. For example, a 2021/22 claim must be submitted by 5 April 2026.

Overpayment relief is the formal route, but HMRC will check claims carefully. The wording and structure are important. The claim must:

• State it’s for overpayment relief

• Specify the tax year

• Explain why too much tax was paid

• Quantify the overpayment

• Confirm whether an appeal has been made

• Include a signed declaration

Precision here saves time later and we’re always happy to guide you through it properly.

Advisory Fuel Rates (From 1 March 2026)

HMRC’s new advisory fuel rates are in place.

Petrol, diesel and home-charging electric rates remain unchanged. LPG and public charging rates have shifted slightly. Employers can continue using the previous rates until 31 March 2026.

For employees using their own vehicles, the Approved Mileage Allowance Payment remains:

• 45p per mile (first 10,000 business miles)

• 25p per mile thereafter

• Plus 5p per passenger

Employers can also reclaim input VAT on the fuel element, provided VAT receipts are retained. Small detail, useful saving.

Company Vehicles & Benefits in Kind

From 6 April 2026:

• Van benefit charge increases to £4,170

• Van fuel benefit charge increases to £798

• Car fuel benefit multiplier rises to £29,200

Company cars remain a perennial tax trap. The benefit-in-kind calculation depends on list price, CO₂ emissions and fuel type. Pool cars can avoid a benefit charge, but only if the conditions are genuinely met in practice.

A recent tribunal case showed that informal historic agreements with HMRC don’t override the legislation. If the car doesn’t qualify, it doesn’t qualify. Even if it’s been treated that way for years.

This is one area where assumptions can become expensive surprisingly quickly.

Labour From Third Parties – New Joint Liability Rules

From 6 April 2026, businesses using workers via agencies or umbrella companies may become jointly and severally liable for unpaid PAYE and NIC if the third party fails to pay.

Supply chain due diligence is no longer optional background admin. It’s risk management.

A quick review now could prevent a very awkward letter later.

Key Dates: March & April 2026

A few diary highlights:

• 1 March – Corporation Tax (year to 31/05/2025)

• 19 March – PAYE & NIC (month to 05/03/2026)

• 1 April – Corporation Tax (year to 30/06/2025)

• 1 April – National Minimum Wage increases

• 5 April – End of 2025/26 tax year

• 6 April – Start of 2026/27 tax year

• 6 April – MTD for Income Tax begins

• 30 April – ATED returns and payment due

If 5 April is circled in red ink in your calendar, that’s entirely appropriate.

In Summary

No dramatic tax bombshells this time, just a steady tightening of the fiscal landscape. Threshold freezes, rising effective tax rates and increasing compliance requirements mean proactive planning is more valuable than ever.

We’re here to help you navigate it all clearly, calmly, and without unnecessary drama, though we can’t promise never to raise an eyebrow at a particularly creative piece of tax legislation.

Categories: Positive Accountant