 The UK Spring Statement 2026 highlights a growing trend in the UK tax system: increasing tax revenues through frozen thresholds and rising investment tax rates rather than dramatic headline tax rises.
For business owners, self-employed professionals, property investors and high-net-worth individuals, the next few years could bring higher effective tax bills unless proactive planning is put in place now. This guide explains the most important tax changes announced or confirmed in the Spring Statement and upcoming reforms starting from April 2026. Quick Summary: Spring Statement 2026 Tax Changes For those wanting a fast overview, here are the key takeaways: • Income tax thresholds remain frozen, increasing tax through fiscal drag • Dividend tax rates rise in April 2026 • Savings and property income tax rates increase in April 2027 • Making Tax Digital expands in April 2026 • Personal allowances will be re-ordered across income types • Long-term tax pressure is increasing on investors, landlords and company directors These developments mean forward tax planning is becoming essential for entrepreneurs and investors. What Was the Main Message from the Spring Statement 2026? The government’s economic strategy focuses on: • Maintaining fiscal stability • Controlling borrowing • Increasing tax revenues gradually • Encouraging long-term economic growth However, rather than introducing major tax rises immediately, the government is relying heavily on stealth taxation through frozen allowances and adjustments to investment income taxation. For many taxpayers, this means paying more tax even if tax rates appear unchanged. How Frozen Tax Thresholds Are Increasing Your Tax Bill One of the biggest hidden tax increases comes from the continued freeze on income tax thresholds. The key thresholds currently remain: 20% Tax - After Personal Allowance £12,570 40% Tax - Higher Rate £50,270 45% Tax - Additonal Rate £125,140 These thresholds are expected to remain frozen until 2031. As wages, dividends and business profits increase over time, more individuals will gradually move into higher tax brackets. This effect — known as fiscal drag — is expected to bring millions more taxpayers into higher tax bands over the next few years. For entrepreneurs and professionals whose income grows annually, the impact can be significant. Dividend Tax Is Increasing from April 2026 Company directors and investors will see a notable rise in dividend taxation from April 2026. New dividend tax rates from April 2026 Basic Rate 8.75% rises to 10.75% Higher Rate 33.75% rises to 35.75% Additional Rate 39.35% rises to 39.35% At the same time, the Dividend Allowance remains just £500, meaning most dividends are now taxable. Why this matters for company directors Many business owners extract profits through dividends instead of salary because it has historically been tax efficient. With higher dividend tax rates, business owners may need to reconsider: • Profit extraction strategies • Pension contributions • Dividend timing before April 2026 • Use of family shareholdings Even modest dividend income could now produce meaningfully higher tax bills. Tax on Savings and Property Income Will Rise in 2027 Another change confirmed in recent fiscal announcements affects investment income from April 2027. Tax rates on savings and property income will increase by two percentage points across all tax bands. Example from April 2027: Savings Income 20% rises to 22% Property Income 20% rises to 22% Higher-rate and additional-rate taxpayers will also face higher rates. For landlords and investors, this change reduces after-tax investment returns. Combined with mortgage costs and regulatory pressures, the UK property sector is becoming significantly more tax intensive. How Personal Allowances Will Change in 2027 Another lesser-known tax change will affect how personal allowances are applied. From April 2027, allowances will automatically be allocated in the following order:
The change means investment income may become taxable sooner, particularly for individuals with multiple income streams. Making Tax Digital Expands in April 2026 The government is continuing its digital tax transformation through Making Tax Digital for Income Tax (MTD ITSA). From April 2026, self-employed individuals and landlords with annual income above £50,000 must: • Maintain digital accounting records • Submit quarterly updates to HMRC • Use approved digital software This is a major shift from the traditional annual self-assessment system. Businesses that still rely on spreadsheets or manual bookkeeping should begin transitioning to cloud accounting systems or use an established tax accountant like Tax Affinity well before the deadline. What These Changes Mean for High-Net-Worth Individuals HNWIs are particularly exposed to the evolving tax landscape. Key risks include: • Higher dividend tax on large investment portfolios • Increased taxation on savings income • Greater tax exposure from frozen allowances • Future inheritance tax pressures due to frozen thresholds Strategic planning is therefore essential to protect wealth and manage long-term tax exposure. Smart Tax Planning Opportunities Before 2026 Although tax burdens are increasing, there are still powerful planning opportunities available. 1. Extract dividends before rate increases - Company directors may benefit from timing dividend distributions before April 2026. 2. Increase pension contributions - Pensions remain one of the most tax-efficient wealth planning tools in the UK. 3. Use ISA allowances - Investment income inside ISAs remains free from income tax and capital gains tax. 4. Family tax planning - Transferring assets or shares between spouses can reduce household tax exposure. 5. Business structure reviews - Some entrepreneurs may benefit from reviewing whether their business structure remains optimal. The Key Takeaway from the Spring Statement 2026 The UK government is not dramatically increasing headline tax rates. Instead, it is gradually increasing tax revenues through: • Frozen thresholds • Rising investment tax rates • Reduced allowances • Expanding tax reporting requirements For business owners, investors and self-employed professionals, the result is the same: higher tax bills unless proactive planning takes place. Expert Tax Planning for Business Owners and Investors At Tax Affinity Accountants, we help clients stay ahead of tax changes through proactive advice and strategic planning. Our clients include: • Business owners and entrepreneurs • Self-employed professionals • Property investors • Company directors • High-net-worth individuals If you want to reduce your tax exposure and plan effectively for the upcoming 2026 and 2027 tax changes, our expert advisers are here to help. #SpringStatement2026 #UKTaxChanges #DividendTaxIncrease #TaxPlanningUK #BusinessOwnersUK #SelfEmployedUK #MTD2026 #PropertyInvestorUK #HNWIPlanning #UKAccountants #FinancialPlanningUK About the Author - Written by Anni Khan, Tax Affinity Accountants Reviewed by Andrew Khan, Principal Accountant, Tax & Forensic Accounting Specialist, Recognised & authorised to act on clients’ behalf with HMRC & Companies House. Tax Affinity Accountants are UK-based tax and accountancy specialists supporting individuals and SME businesses. With offices in Worcester Park, Kingston upon Thames, and Epsom & Ewell, they act for clients across the UK and internationally, providing compliant, HMRC-focused tax advice and support. For more information, visit www.taxaffinity.com or read more insights at www.taxaffinity.com/blog. Important Notice: This article is for general information purposes only and does not constitute personalised tax or company formation advice. Company law and fees can change; professional guidance should be sought based on your individual circumstances. Schema-Optimised FAQ Section Spring Statement 2026 FAQs What is the UK Spring Statement 2026? The Spring Statement 2026 is the UK government’s fiscal update outlining the latest economic forecasts, tax policy direction and public spending plans. While it typically introduces fewer tax changes than the Autumn Budget, it provides important updates that affect business owners, investors and taxpayers planning for the coming financial years. Will taxes increase after the Spring Statement 2026?Although major headline tax rises were not introduced, several changes will increase tax liabilities over time. These include frozen income tax thresholds, higher dividend tax rates from April 2026 and increased tax on savings and property income from April 2027. What are the new dividend tax rates from April 2026?From April 2026 the dividend tax rates will increase to:
How does the dividend tax increase affect company directors?Many company directors pay themselves through a combination of salary and dividends. Higher dividend tax rates may reduce the tax efficiency of this strategy, meaning directors may benefit from reviewing their profit extraction approach, pension contributions and dividend timing before April 2026. What is fiscal drag and how does it affect UK taxpayers?Fiscal drag occurs when tax thresholds remain frozen while income rises. As wages and profits increase over time, more income is pushed into higher tax brackets, meaning taxpayers gradually pay more tax without official rate increases. What is happening with tax on savings and property income?From April 2027, tax rates on savings and property income will increase by two percentage points across all tax bands. This change will affect investors, landlords and individuals with large savings portfolios. When does Making Tax Digital start for the self-employed?Making Tax Digital for Income Tax will apply from April 2026 for self-employed individuals and landlords earning more than £50,000 per year. They will need to maintain digital records and submit quarterly updates to HMRC using approved software. How can business owners reduce tax following the Spring Statement?Business owners may benefit from proactive tax planning strategies such as:
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 Tax Affinity has high street branches for customers support The new UK Chancellor (yes another one...can you believe the UK had 4 Chancellors in 4 months in 2022) has given his first budget. And as before we have refined the main points and facts for business owners including SME's and entrepreneurs. So you can easily navigate and plan ahead with clarity.
The main points from the budget are: 1. Energy price guarantee for homes will remain at £2,500 extended for only 3 months until end of June. It was set to rise to £3,000 but that has now been cancelled. And no new support announced for business bills. 2. Corporation Tax for a limited company will rise from 19% to 25% from 6th April 2023. Small company's with profit of less than £50k will still pay the lower 19%. But companies with profits between £50k to £250k have to pay between 19% and 25% but are allowed to claim marginal relief. Company profits over £250k will be taxed at 25%. And companies with group ownership of other companies may end paying close to 26.5% (effectively) because the corporation tax for Group Companies was increased also - sadly all important details missed by the main stream media. 3. Tax-free yearly allowance for pension cash out to rise from £40,000 to £60,000 after being the same for the past 9 years. 4. Fuel duty (tax) frozen so the 5p cut to fuel duty/tax on petrol and diesel which was due to end in April, has been extended for another year. 5. Maximum amount a worker can accumulate in pensions over their lifetime before paying extra tax currently £1.07 Million will be cancelled. Now there is no limit. 6. Tax on tobacco to increase by 2% above inflation for normal and 6% above inflation for hand-rolling tobacco. 7. Those who are already drawing down on their pensions, the total amount they can save tax free under the Money Purchase Annual Allowance is increased from £4,000 to £10,000 from April 2023. 8. 30 hours of free childcare for working parents in England expanded to cover 9 months to three year olds. 9. New £600 "incentive payment" for people becoming childminders, and the rules have been changed in England to let childminders look after more children. 10. Immigration rules to be relaxed for five roles in the construction sector, to ease labour shortages in the Industry. These categories are:
11. Super deduction of 130% will end on 31/03/23 and move back to 100% AIA for plant and machinery purchased and can be used directlty against corporation tax payable. A list of typical purchases is lasting until 31/03/26:
If your worried how these will effect you and need more specific guidance to help your business carry on growing during turbulent times then contact one of our Tax Affinity expert business advisors today (click here). With their countless years of knowledge and expertise they can guide your business to success even in the toughest of economic conditions. By Anni Khan at Tax Affinity Accountants Tax Affinity Accountants are experts Business, Tax and Accountancy. With branches in Worcester Park and Kingston upon Thames and Epsom and Ewell they are considered in the Industry to be expert business accountants and tax advisors for both individuals and small & medium sized businesses (SME's). Helping and supporting both individuals and limited company owners / self employed people throughout the UK and the world, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.  In a nutshell it was typical political waffle and little substance. But what we want to know and what our clients want to know is what it means for them. Well check out the simple list below to save time and get straight to the main factual points.
By Anni Khan at Tax Affinity Accountants Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Surbiton , Worcester Park , Kingston upon Thames , Cheam and Epsom they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice and support. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends. |
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