05 Mar 2026
Spring Statement 2026 - What The OBR Outlook Means For Future Taxation
The Economic Background
Following the Spring Statement, the Office for Budget Responsibility (OBR) has published its latest Economic and fiscal outlook. While highly technical, the report provides a clear indication of the economic environment in which future tax policy will be set.
The OBR expects modest economic growth over the coming years, well below long-term historic averages.
At the same time, public sector debt remains high and government borrowing, although forecast to fall, is still significant. This combination limits the scope for tax cuts and places a strong emphasis on protecting existing tax revenues.
A High Tax Burden Is Set To Remain
One of the clearest messages from the outlook is that the overall tax burden is expected to remain high. Tax receipts as a share of the economy are already close to post-war highs and are forecast to stay at elevated levels for the foreseeable future. As a result, large and broad-based tax reductions appear unlikely.
How Revenue Is Likely To Be Raised
Rather than increasing headline tax rates, Governments are expected to rely on more incremental measures. A key example is the continued freezing of income tax thresholds, which gradually pulls more income into higher tax bands as earnings rise.
Even without formal rate increases, many individuals will see their effective tax rate increase over time.
Implications For Individuals And Businesses
Income tax and National Insurance are expected to remain the most important and reliable sources of government revenue. For businesses, corporation tax receipts remain strong, suggesting limited scope for rate reductions and ongoing scrutiny of reliefs and allowances.
High debt levels and long-term pressures from an ageing population also increase the likelihood of further changes to capital taxes, including Capital Gains Tax and Inheritance Tax, particularly through restrictions to allowances and reliefs.
Planning Remains Essential
The OBR outlook points to a tax system focused on stability and revenue protection rather than generosity.
Regular review and forward planning will therefore remain essential for both individuals and business owners.
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Strategic balance sheet management and forward planning are therefore critical.
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