Budget 2026/27: Overview

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Budget 2026: Overview

Year-end tax planning

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The UK Chancellor delivered his Spring Statement on 26 February 2026 against a backdrop of improving economic stability, a renewed focus on fiscal discipline, and a clearer platform for future growth.

It was a confident and pro-growth statement, combining a firm grip on the public finances with measures designed to support business investment, productivity, and long-term economic resilience.

The Chancellor emphasised that the government’s approach was to back enterprise, restore confidence, and create the conditions for sustainable growth that can support public services over the long term.

There were no immediate-action tax announcements for most taxpayers in the speech itself, but individuals may still wish to review their wider tax position, and our Year-end tax planning guide may help as a list of things to consider.

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Budget 2026/27: Key points

  • The Office for Budget Responsibility (OBR) forecasts UK GDP growth of 1.1% in 2026, rising to 1.6% in 2027.
  • Inflation has fallen significantly to around 3%, with OBR expecting it to drop to 2.3% in 2026 and reach the 2% target from 2027 onwards.
  • Unemployment is forecast to peak at 5.33% in 2026, before gradually falling to 4.1% by 2030.
  • Public sector borrowing is projected to fall from 4.3% to 3.6% next year, continuing downwards to 1.8% by 2029–30.
  • Interest rate cuts (six since the election) are expected to reduce household mortgage costs, with typical remortgagers saving over £1,300 per year.

Budget 2026/27: Macro updates

  • GDP growth: 1.1% in 2026, 1.6% in 2027.
  • Inflation: Expected to fall from 3.4% (2025) to 2.3% (2026), then stabilise at 2% from 2027.
  • Borrowing: OBR forecasts borrowing to decline steadily, reaching 1.8% by 2029/30.
  • Unemployment: Predicted peak of 5.33% in 2026, then falling annually.

Budget 2026/27: Personal tax

  • Personal Allowance remains frozen at £12,570 until at least 2028.
  • Higher-rate threshold also remains frozen, pushing more earners into the 40% and 45% bands over time.
  • OBR estimates the freeze will pull millions more into tax by 2030/31, including many pensioners as the state pension rises above the allowance.
  • No new headline personal tax cuts or increases were announced in the Spring Statement.

Budget 2026/27: Business taxes

  • Corporation tax remains at the previously set structure (main rate 25%, small profits rate 19%).
  • No new capital allowances changes were announced; existing full expensing regime continues as previously legislated.
  • VAT thresholds remain unchanged, with no new adjustments announced for 2026.

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