Spring Forecast 2026 Snapshot

 

The Spring Forecast updates Parliament and the nation on the state of the economy, public finances and progress against the Government’s fiscal objectives. 

This is not a full Budget and traditionally does not introduce major tax reforms. Instead, it provides updated economic forecasts and confirms the continuation of previously announced measures.

This snapshot provides high-level bullet points of the key confirmations made by the Chancellor from the dispatch box. 

Important note: The Office for Budget Responsibility (OBR) has stated that its forecasts do not take into account any potential impact from the recent rise in energy prices triggered by the conflict in the Middle East. Future revisions may therefore reflect developments in global energy markets. 

More details are available from GOV.UK. 

OBR: Economic Forecasts 

The following projections are published by the OBR, the UK’s independent fiscal watchdog and outline its latest expectations for economic performance and public finances over the coming years. 

Growth 

The projected annual rate of UK economic expansion, reflecting overall business activity, consumer spending and investment across the economy. 

2026: 1.1% (previously 1.4%)
2027: 1.6% (previously 1.5%)
2028: 1.6% (previously 1.5%)
2029: 1.5% (previously 1.5%)
2030: 1.5% (previously 1.5%) 

Consumer Prices Index (CPI) Inflation 

The expected annual rate of inflation, measured by the CPI; indicating the pace at which the cost of goods and services is rising. 

2026: 2.3% (previously 2.5%)
2027: 2.0% (previously 2.0%)
2028: 2.0% (previously 2.0%)
2029: 2.0% (previously 2.0%)
2030: 2.0% (previously 2.0%) 

Public Sector Net Borrowing 

Forecast government borrowing expressed as a percentage of gross domestic product (GDP), showing the extent to which public spending exceeds tax revenues each year. 

2026/2027: 3.6% (previously 3.5%)
2027/2028: 2.9% (previously 3.0%)
2028/2029: 2.5% (previously 2.6%)
2029/2030: 1.8% (previously 1.9%)
2030/2031: 1.6% (previously 1.9%) 

Unemployment 

The projected proportion of the workforce that is out of work but actively seeking employment, indicating overall labour market conditions. 

2026: 5.3% (previously 4.9%)
2027: 4.9% (previously 4.6%)
2028: 4.4% (previously 4.3%)
2029: 4.2% (previously 4.2%)
2030: 4.1% (previously 4.1%) 

The OBR will assess the Chancellor’s fiscal rules once a year in future, rather than twice yearly as previously. 

Key Measures Confirmed 

Tax and Duties 

Income Tax 

No new income tax rate changes were announced. 

• The personal allowance (£12,570), higher-rate threshold (£50,270) and additional-rate threshold (£125,140) remain frozen until 2030/31. 

• From 2027/28, pensioners whose only income is the basic or new State Pension (with no additional income) will not be required to pay small amounts of income tax if their State Pension exceeds the personal allowance. 

• Income tax rates on savings and rental income will increase by 2% from April 2027. 

• The basic and higher rates of dividend tax will increase by 2% from April 2026. The additional rate remains unchanged. 

National Insurance Contributions (NICs) 

No further changes were announced. 

• From 2029/30, salary sacrifice pension contributions above £2,000 per year will be subject to both employee and employer National Insurance contributions. 

Individual Savings Accounts (ISA) 

No new ISA reforms were introduced. 

• The ISA allowance remains at £20,000. 

• From April 2027, the maximum cash ISA annual allowance for individuals under 65 will be £12,000. 

• Individuals aged 65 and over will continue to be able to contribute up to £20,000 to a cash ISA each year. 

Inheritance Tax (IHT) 

No additional IHT changes were announced. 

• From April 2026, each individual will have a £2.5 million allowance for 100% Agricultural Property Relief (APR) and Business Property Relief (BPR), transferable to a surviving spouse or civil partner. Qualifying assets above this threshold will receive 50% relief and will therefore be subject to an effective 20% inheritance tax charge. 

Property Taxes 

The previously announced High Value Council Tax Surcharge remains on schedule. 

• From April 2028, properties valued at over £2 million will face an additional annual charge of £2,500. 

• Properties valued at over £5 million will face an additional annual charge of £7,500. 

• The surcharge will be collected by local authorities on behalf of central government. 

Cars and Transport Duties 

No new measures were introduced. 

• The temporary 5p cut in fuel duty remains extended until the end of August 2026, with rates gradually returning to March 2022 levels by March 2027. 

• Vehicle Excise Duty for cars, vans and motorcycles will increase in line with RPI from April 2026. 

• From April 2028, a new mileage-based Electric Vehicle Excise Duty (eVED) will apply, charging electric car drivers 3p per mile and plug-in hybrid (PHEV) drivers 1.5p per mile, with mileage verified through MOT testing. 

Work and Benefits 

Previously announced uprating measures remain intact, with no changes announced. 

• The State Pension and Pension Credit will increase by 4.8% in 2026/27. 

• Working-age benefits will increase by 3.8% in 2026/27. 

• From April 2026, the National Living Wage (age 21+) will increase from £12.21 to £12.71 per hour. 

• The National Minimum Wage (age 18–20) will increase from £10.00 to £10.85 per hour. 

• The two-child limit in the Universal Credit Child Element will be removed from April 2026. 

Other Measures 

• All regulated rail fares in England will be frozen for one year from March 2026. 

• NHS prescription charges in England will remain frozen in 2026/27, with the cost of a single prescription remaining at £9.90. 

Summary 

This Spring Forecast introduced no new changes to personal taxation, with previously announced measures remaining in place alongside updated economic forecasts.