Chancellor Rachel Reeves delivered the Spring Statement 2026 on 26 March 2026. Unlike a full Budget, the Spring Statement contained no new tax announcements — but that does not mean nothing has changed. Several significant measures announced in the October 2024 Autumn Budget are now fully in effect, and the Office for Budget Responsibility (OBR) revised its economic forecasts downward. Here is what matters for UK business owners.
No New Announcements — But the Changes Already in Force Are Biting
The Chancellor made no new tax announcements at this statement. However, the measures legislated in the October 2024 Autumn Budget — which took effect from April 2025 — are now fully embedded in business costs, and their impact is being felt across payroll, dividends and personal tax:
- Employer NIC at 15% — up from 13.8%, with the secondary threshold reduced to £5,000. This is now the cost base every employer is operating from
- Frozen income tax thresholds — the personal allowance and higher rate threshold remain frozen, pulling more workers into higher tax bands as pay rises with inflation
- Dividend allowance at £500 — reduced from £2,000 in 2022/23, significantly increasing tax on dividends for director-shareholders
The OBR's Growth Forecast: What It Means
The Office for Budget Responsibility revised UK GDP growth down to 1.1% for 2026, from a previous forecast of 2%. This reflects slower-than-expected recovery and continued pressure from interest rates and global uncertainty.
For business owners, a lower growth environment means:
- Consumer spending growth will be more modest — relevant for B2C businesses
- Credit conditions may remain tighter for longer
- Cost management becomes more important relative to revenue growth
A 1.1% growth forecast is not a recession. The UK economy is growing — just more slowly than hoped. For most SMEs, the immediate practical impact of the downgrade is indirect (through consumer confidence and business lending) rather than direct.
National Living Wage: Now £12.71/hr
Confirmed at the Spring Statement: the National Living Wage rose to £12.71/hr from 1 April 2026. This was announced in the Autumn Budget and confirmed in the Spring Statement. If you employ staff, your payroll should already reflect this rate.
| Category | Rate from 1 April 2026 |
|---|---|
| National Living Wage (age 21+) | £12.71/hr |
| 18–20 National Minimum Wage | £10.85/hr |
| 16–17 & Apprentice rate | £8.00/hr |
Welfare Spending Cuts: Indirect Business Impact
The Chancellor announced significant cuts to welfare spending — including changes to Personal Independence Payment (PIP) and incapacity benefits. For most business owners, the direct impact is limited. However, businesses in care, health, and social services sectors may see changes in the client base they serve.
Defence Spending: An Opportunity Sector
The government confirmed increased defence spending, moving toward a target of 2.5% of GDP by 2027. For businesses in engineering, technology, manufacturing, and professional services that supply into the defence sector — directly or through the supply chain — this represents a growing market.
What Should UK Business Owners Do Now?
- Review your payroll costs: With NLW at £12.71 and employer NIC at 15%, ensure your employment cost budgets for 2026/27 are accurate
- Review your director salary and dividend strategy: The combined effect of the employer NIC increase, lower dividend allowance, and frozen thresholds means the optimal extraction approach for 2025/26 may need revisiting
- Plan ahead for MTD: Making Tax Digital for Income Tax is now live for those earning over £50,000. If you are approaching or above this threshold, speak to us about your obligations
- Maintain cash reserves: In a lower-growth environment, liquidity is more important than in a buoyant economy
Spring Statement 2026 documents and the OBR's Economic and Fiscal Outlook are available at gov.uk/spring-statement-2026.
General information only. This article provides general guidance on UK tax and accounting matters and reflects our understanding of legislation and HMRC guidance at the time of publication. Tax rules, rates, and thresholds change frequently. Nothing in this article constitutes personalised tax or financial advice. Always seek advice specific to your circumstances from a qualified accountant before taking action. Ledgertech Accountants Ltd accepts no liability for any loss arising from reliance on this content.
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