'Plain Bread' Spring 2026 Statement but 'Yeast' We Forget: Tax 'Dough' is Still Rising
Published / Last Updated on 03/03/2026
A play on bread, dough, and yeast in the title, but this is exactly what Chancellor Rachel Reeves’ Spring Statement (mini-Budget) was today. The tax 'dough' is rising.
Mrs Reeves has already committed to only offering one round of fiscal events per year i.e., one major ‘Budget’ and the other to be a simple Spring Statement, although with the state of the economy and geo-political tensions, this may not have been the case.
Taxpayers have been hit hard by the last two, full Autumn Budgets so, not much was expected today with stability the name of the game to offer confidence to voters and to worldwide investors. Indeed, that is all we got, broadly a statement of the UK economy as it stands, which, despite the positive ‘spin’ did not look that good.
- Gross domestic product GDP (economic output), originally forecast at 1.4% growth for 2026/27 in the November Budget, is now forecast to be even slower at 1.1% pa.
- Unemployment increasing to 5.3% (it’s highest rate since Lockdown) and only forecast to fall to 4.1% by 2030. This is no mass employment miracle offered by the Government, recruitment is down, redundancy is up due the massive tax hit on employers.
- Inflation was forecast to fall faster than was previously expected from 3.4% in 2025 to 2.3% in 2026, and 2.0% from 2027 onwards but, this was all forecast before US/Israel attacks on Iran, Iran ‘lasing out on many’, oil prices now climbing and stock markets tumbling.
- Government ‘headroom’ on borrowing i.e. wiggle room on spending was forecast at £21.7bn but the forecast is now up at £23.6bn. This tells you we are paying even more tax.
- Government debt as a % of GDP is missing its target: 94.3 per cent of GDP now rising to 96.1 per cent of GDP. Labour claim it is still on target for its manifesto promise that this would start to fall in 2029, but to do this gives no room for tax reductions.
- Housing building targets of 260,000 pa have been missed, only coming in at 220,000 and with mortgage interest rates now forecast to average 4.5% pa, up from 4.1% pa through to 2030, this tell us that interest rates may be held higher for longer.
- Net Migration is falling but this is due to British citizens leaving the UK not immigration controls. Overall the UK population is still set to increase by 200,000 to 300,000 pa over the coming years.
Iran Conflict
Remember, all these forecasts were made before US/Israel/Iran conflict, oil prices rising, stock markets tumbling and the fact that the UK can do little to protect its own bases quickly, defence spending is still only being increased to 2.7% of GDP and nowhere near Thatcher’s 5% of GDP. Have we been left unable to defend ourselves by all governments of all parties? We think so, so taxes will rise to meet this need. In addition, Iran and oil prices could upset all the above forecasts and may mean even more taxes anyway.
Not to be Disguised by this ‘Neutral’ Spring Statement and Geopolitical Conflict. Taxes are up Massively.
- We now are taxed at the highest % of GDP since World War II, and we are not at war (yet!).
- Our tax allowances are frozen until 2031, meaning we will all pay more tax.
- 1m million more pensioners will pay tax in the run up to 2031.
- Dividend income taxation is up 2% in April and Savings Income/Property income taxes are up 2% in 2027.
- Voluntary national insurance contribution rules change from April 2026 meaning more tax.
- VCT tax relief is cut from 30% to 20% from April 2026 meaning more tax.
- CGT Business Asset Disposal Relief (BADR) tax rate increases to 18% in April 2026.
- Fuel duty cap (just under £0.53 per litre petrol/diesel) is removed in June potentially meaning even more tax. The real cost of a £1.37 litre when you remove fuel duty and VAT is just £0.61 per litre.
- Electric vehicles will be subject to high value purchases soon and a EV rate per mile tax from April 2028 meaning even more tax.
Already, this government’s tax take is up £45-£50bn more pa, this will need to increase even more given the benefits ‘bill’ is likely to cost an extra £74bn pa by 2030. That’s 3yrs 9mths away.
A quiet Spring Statement yes, but don’t be fooled, more tax is on its way and you need to plan to protect your wealth.
