Rachel Reeves delivered her Spring Statement today with a new war in the Middle East delivering greater uncertainty that will likely render the Office for Budgetary Responsibility’s (OBR) forecasts as out of date already.

The Chancellor praised her own performance heralding falling inflation, reduced borrowing, improved living standards, and a growing economy as proof that Labour are ‘delivering on change’.

This included the recent price-cap announcement that average household energy bills will fall by £150 per year, but much of this will rely on how long Iran’s effective closure of the Straits of Hormuz continues to restrict supply and force’s energy prices up.

Rachel Reeves also heralded changes to our relationships with global partners, including getting closer to the European Union, alongside harnessing the power of AI, and transforming the economic geography of the UK and unlocking every part of Britain.

So, behind the rhetoric what does the OBR’s forecasts tell us:

• The fiscal context remains ‘challenging’ with public sector net borrowing at nearly double the advanced-economy average.
• GDP growth to slow from 1.4% last year to 1.1% in 2026, before rising to 1.6% in the following two years.
• Inflation is expected to fall to the Bank of England’s target of 2% in late 2026.
• Public Sector Net Debt over the forecast to the early 2030’s may fall only marginally to a projected 95% against the OBR’s November forecasts.

Someone once said, ‘it’s tough to make predictions, especially about the future’ and unfortunately, I suspect the prospect of rising energy costs may at best delay but more likely reverse the prospect of falling inflation in the short term.

In the current climate I feel ‘no news is good news’ and as expected, there have been no new tax or spending announcements.

However, we have still have plenty of earlier announcements yet to take effect:

From 6^th April 2026

• Agricultural and Business Property Relief (APR/BPR) against Inheritance Tax will be limited to 100% on the first £2.5M of qualifying assets with 50% relief thereafter.
• Relief on AIM Shares will be restricted to 50% irrespective of value.
• Income Tax on Dividends will increase to 10.75% for basic rate taxpayers and 35.75% higher rate taxpayers.
• The income tax relief that can be claimed by an individual investing in Venture Capital Trusts (VCTs) will be reduced to 20%.

From April 2027

• Income tax on savings income will increase by 2% across all tax bands.
• Income tax on property income will increase to 22%, 42% and 47% at the respective basic, higher and additional rate income tax bands.
• Most unused pension funds and death benefits will fall into the deceased’s estate for Inheritance Tax purposes.
• Cash ISA contributions will be limited to £12,000 for under 65’s although you can still contribute up to £20,000 into Stocks and Shares ISAs.

From April 2028

• Introduction of the High Value Council Tax Surcharge for homes worth more than £2m, starting at £2,500 per year.

From April 2029

• Salary Sacrifice pension contributions benefitting from National Insurance exemption will be limited to £2,000 per year.

So, whilst no news may be good news there are still plenty of challenges ahead, starting with ensuring you are making the most of any unused ISA and Pension allowances as we approach the end of the tax year on the 5^th April.

To review your personal circumstances and explore the financial planning opportunities available to you, including making full use of current tax allowances please contact us on 0330 320 9280, email info@cravenstreetwealth.com, or complete our online enquiry form.

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