Spring Forecast - Cloudy With A Chance Of Pain

With the Chancellor due to deliver the Spring Statement this afternoon, there’s one thing we can be fairly sure of – it won’t be a full Budget.

That’s by design. Rachel Reeves and the Treasury have been consistent in saying there will be only one major fiscal event each year, aiming to provide households and businesses with a bit more certainty. The Autumn Budget did the heavy lifting last time around, setting out over £100 billion in combined tax rises and spending plans. So the expectation is that 26 March will be more of an update than a grand reveal.

That said, expectations and reality don’t always stay in sync – and several economic headwinds are raising the question: could we still see tax-related news that affects personal finances?

The Problem Facing the Chancellor

When the OBR delivers its updated forecasts alongside the Spring Statement, it’s expected to confirm that the Chancellor’s previous “headroom” – the margin by which she was on course to meet her self-imposed fiscal rules – has been wiped out.

That’s thanks to a few uncomfortable trends:

• Economic growth is weaker than expected

• Interest rates and government borrowing costs are higher than hoped

• Tax receipts have fallen short

• And any additional defence spending commitments could stretch things further

So far, the Chancellor has ruled out new tax rises on the scale of last year’s Autumn Budget – but she’s also had to walk back from that stance slightly, leaving the door open to smaller, more targeted changes.

The Quiet Option: Freezing Thresholds (Again)

One change being heavily talked about is a further freeze on income tax thresholds beyond the current end date of April 2028 – potentially out to 2030.

Technically, this isn't a tax rise. But in practice, as incomes grow with inflation while thresholds stay still, more of your income becomes taxable or is taxed at a higher rate – it’s what’s often referred to as “fiscal drag.”

If the Chancellor does announce a continuation of the freeze, the impact won’t be immediate. But by 2029/30, it could quietly bring in £4 billion or more per year – even more if National Insurance thresholds are frozen too.

From a planning point of view, it means the next few years could see more people pushed into higher tax bands even if their real purchasing power stays the same. For high earners, this also increases the risk of losing allowances (such as the personal allowance taper or the reduction in the personal savings allowance).

What Should You Be Thinking About?

Whether or not today brings formal announcements, the broader direction of travel is clear – fiscal policy is going to stay tight. The government may choose not to raise rates, but allowing inflation to do the work of increasing tax take through frozen thresholds is politically easier and economically effective.

A few practical planning points:

• Use your allowances while you have them. Consider topping up pensions, making ISA contributions, and reviewing capital gains before the end of the tax year.

• Plan around fiscal drag. If your income is increasing, be aware of how that affects things like child benefit eligibility, the pension annual allowance taper, or savings income taxability.

• Review family income strategies. If you’re married or in a civil partnership, it may be worth thinking about how income and assets are split, especially with frozen bands ahead.

• Consider bringing forward income if you're able to control timing (such as dividends or trust distributions), particularly if you expect to cross a tax threshold in future years.

Final Thought

Whatever happens today, the writing is already on the wall. The combination of weak growth, stretched public finances, and firm commitments not to raise headline tax rates makes it more likely we’ll see stealthier measures – freezes, tweaks, and adjustments that add up over time.