Beyond the Spring Statement: Navigating the Future of UK Tax in 2026 and Beyond

Welcome to our in-depth blog post inspired by the recent Croner-i webinar, "Beyond the Spring Statement: The Future of Tax," held on March 4, 2026. With the Spring Forecast delivered by Chancellor Rachel Reeves just a day earlier on March 3, this session provided crucial insights into upcoming tax changes affecting businesses, individuals, and tax professionals. Featuring experts like Sara White, Diane Wright, Joanna Lawless, Sarah Kay, and Andy Richens, the webinar covered everything from economic forecasts to digital tax transitions, inheritance tax reforms, VAT updates, and new regulations for tax advisers.

As we approach key implementation dates in April 2026 and beyond, this blog highlights key points to help you prepare. Whether you're a sole trader, landlord, business owner, or tax adviser, these changes could significantly impact your financial planning. Let's dive in.

Spring Forecast Statement: Key Economic and Tax Takeaways

Sara White, Editor at Business & Accountancy Daily, kicked off the webinar with an analysis of the Spring Forecast. Amid global uncertainties, particularly the ongoing war in the Middle East, the Office for Budget Responsibility (OBR) has painted a cautious picture for the UK economy.

Economic Outlook

• Growth Projections: Downgraded to 1.1% for 2026, but brighter for 2027 and 2028 at 1.6%. All forecasts come with a major caveat: potential "very significant impacts" from geopolitical risks.
• Unemployment: Expected to peak at 5.3% this year.
• Inflation Risks: Immediate threats from soaring oil and gas prices, disrupted supply chains, and rising food costs.

Tax Revenue and Policy Stability

Positive news for businesses: No new tax announcements were made, aligning with the Chancellor's commitment to one Budget per year for greater certainty.

• Rising Tax Take: OBR anticipates significant increases over the next three years, driven by elevated employment taxes. Income tax and National Insurance Contributions (NICs) are projected to reach £480bn an 11.4% rise largely due to employer NIC hikes.
• Inheritance Tax Surge: Expected to double from £8.2bn in 2024-25 to £15bn by 2030-31.
• Student Loans Impact: Adding an average £11bn annually to national debt, with a potential £5.6bn hit if the planned 2027 threshold freeze for Plan 2 loans is reversed.

This stability is welcome, but the emphasis on higher revenues underscores the need for proactive tax planning.

Making Tax Digital (MTD) for Income Tax Self-Assessment: The Big Shift Ahead

Diane Wright, Senior Technical Writer, provided a detailed update on the MTD for Income Tax Self-Assessment (ITSA), which is set to affect nearly 900,000 sole traders, self-employed individuals, and landlords starting April 2026.

Dividend Tax Changes for 2026-27

From April 6, 2026, dividend tax rates will increase:

• Ordinary rate: 10.75%
• Upper rate: 35.75%
• Additional rate: Remains 39.35%
• Nil rate: Applies to the first £500 of dividend income.

Wright also compared profit extraction strategies via salary vs. dividends, using an example with a minimum salary of £12,570:

Key Insight: Opting for £12,570 salary plus dividends yields an additional net receipt of £3,840 compared to all payroll though that's £1,334 less than in 2025-26.

Salary vs. Dividends Summary

• For smaller extractions, dividends remain advantageous due to lower income tax rates, despite no corporation tax (CT) relief and higher tax-plus-NICs on salaries.
• As extractions grow, the employee's NIC rate drops (to 2%), narrowing the gap between salary and dividend tax rates.
• For very large extractions: Dividends face 39.35% additional tax + 25% CT (total 64.35%), while salaries hit 45% additional tax + 2% employee NIC + 15% employer NIC (total 62%).
• Watch for 2027-28: 2% increases in property and savings income tax rates.

MTD for ITSA Essentials

• Scope: Applies to self-employment trades (excluding partnerships) and property rental income. Requires digital record-keeping, quarterly updates, and a year-end process (including adjustments, other income sources, reliefs, and tax return submission by January 31).
• Penalties: New regime for late submissions/payments, but with a "light touch" in early years.

Rollout Timeline

Mandatory based on qualifying gross income (before expenses) from self-employment and property:

• April 2026: Over £50,000 in 2024-25.
• April 2027: Over £30,000 in 2025-26.
• April 2028: Over £20,000 in 2026-27.
• Partnerships and income over £10,000: To be confirmed.
• Adjustments for new businesses or non-12-month periods.

Preparation Tips for April 2026

• Identify clients in scope and explain the system.
• Check for exemptions/deferrals (applications may be needed).
• Secure authorizations via agent services accounts.
• Decide on calendar quarters or special bookkeeping.
• Select MTD-compatible software.
• Update engagement letters, fees, and provide training.

This transition emphasizes digital compliance—start preparing now to avoid penalties.

Inheritance Tax (IHT) Changes: What You Need to Know from April 2026

Joanna Lawless, Senior Technical Writer, outlined significant IHT reforms starting April 6, 2026.

Overview

• £2.5m cap on 100% Business Property Relief (BPR) and Agricultural Property Relief (APR) from April 2026.
• Unused pension funds brought into the IHT scope from April 2027.

BPR/APR Details

• The £2.5m limit applies to chargeable lifetime transfers (CLTs), potentially exempt transfers (PETs), and death estates. Excess value gets 50% relief.
• Combined limit for mixed estates (pro-rated by value).
• Resets every seven years; IHT payable in 10 annual instalments.
• Unquoted shares/securities on recognised exchanges: 50% relief from April 2026.

Spousal/Civil Partner Transfers

• Unused allowances are transferable between spouses/civil partners.
• Pre-April 2026 deaths are assumed to be 100% allowable.
• If allowances increase, unused percentages apply to the new amount.
• Multiple deceased spouses: Inherit from each, but the total percentage is capped at 100%.

Transitional and Trust Rules

• For transfers between October 30, 2024, and April 5, 2026: New rules apply if death occurs post-April 5, 2026, within seven years—recalculate tax accordingly.
• Pre-October 30, 2024, trusts: Full £2.5m allowance, without impacting new trusts.
• Post-October 30, 2024, trusts: Allowance based on qualifying asset value at settlement; applied chronologically; resets every 10 years on charges.
• Individuals can transfer up to £2.5m allowance into a lifetime trust.

Pensions from April 2027

• Unused funds and death benefits are now IHT-liable (trustee discretion no longer exempts them), though spousal/civil partner and charity exemptions remain.
• Exceptions: Limited to dependants' scheme pensions, trivial commutation lump sums, dependants' annuities, or death-in-service benefits.
• Reporting: Aggregate with free estate; split Nil Rate Band (NRB) pro-rata. Personal Representatives (PRs) report separately; joint liability for IHT. Pension Scheme Administrators (PSAs) can retain 50% of benefits for up to 15 months. Clearance certificates protect PRs from undiscovered pensions.

These changes aim to close loopholes and to urgently review estate plans.

VAT Developments: Electronic Invoicing and Import Relief Removal

Sarah Kay, Lead Technical Writer, highlighted upcoming VAT shifts.

Mandatory Electronic Invoicing (E-Invoicing)

• Set for 2029, with details in the 2026 Autumn Budget.
• E-invoices are machine-readable, enabling automated exchanges.
• Already in use for some UK government contracts, bookkeeping software, and EU mandates (e.g., the EU's VIDA for cross-border B2B by July 2030).
• Preparation Advice: Update supplier/customer data, integrate with systems early, don't delay!

Low-Value Import Exemption

• Current relief: No customs duty on imports ≤ £135 (import VAT still applies).
• Removal projected for March 2029, driven by industry pressure (e.g., Retailers Against VAT Abuse Schemes).
• Impact: Benefits UK retailers vs. cheap imports (e.g., from China), but challenges businesses with low-value overseas purchases.
• Use tariffs for classification, seek advice if uncertain.

Regulation of Tax Advisers: New Registration Requirements

Andy Richens, Senior Technical Writer, covered the impending HMRC registration for tax advisers, effective from May 18, 2026.

Who Must Register?

• Advisers interacting with HMRC on client tax affairs (e.g., via phone, post, online submissions).
• Exemptions: Software providers, intra-group advisers, free advice, insolvency practitioners, appeals/info requests, customs/excise/import VAT, VAT representatives.
• Deadline: 3 months from May 18, 2026 (August 18 for SA/CT account holders).

Registration Conditions

• Organisation-level registration; identify "relevant individuals" (e.g., officers involved in tax advice).
• Individuals must: Have no outstanding tax/returns, no HMRC refusals/sanctions/convictions/insolvency/disqualifications.
• Business must be AML-supervised.

Enforcement

• Suspension: Up to 12 months for non-compliance or substandard performance (30-60 days to remedy/appeal).
• Penalties: £5,000 per breach (escalating to £10,000); leads to ineligibility orders (12 months or permanent).
• Naming: HMRC can publish details.
• Suspended advisers must notify clients (£5,000 penalty per client if not).
• Broader Context: Aligns with new "sanctionable conduct" rules from April 2026, replacing dishonest conduct provisions.

This pushes for higher standards to ensure your practice complies to avoid disruptions.

Final Thoughts: Preparing for a Digital, Regulated Tax Landscape

The Spring Forecast and upcoming changes signal a shift toward digital efficiency, higher revenues, and stricter oversight in UK tax. From MTD's quarterly reporting to IHT's pension inclusions and VAT's e-invoicing, proactive steps are essential. Businesses and individuals should consult advisers early, update systems, and review strategies.

If you're affected, now's the time to act; tax certainty starts with preparation.

This blog is based on the webinar content as of March 2026 and is for informational purposes only. Seek professional advice for your specific situation.