During a week dominated by news of the Middle East conflict, on 3 March 2026, Chancellor Rachel Reeves presented the Spring Forecast to Parliament. The Chancellor told MPs she had “restored economic stability” as she presented the Office for Budget Responsibility’s (OBR’s) economic forecasts.

The Chancellor focused on how the government’s policies are delivering economic growth, particularly when looking at Gross Domestic Product (GDP) per person. However, the OBR’s report indicates a more nuanced picture and notes that the fiscal context for the next Budget will remain challenging.

As part of the government’s policy of one major fiscal event a year, the Chancellor announced no new tax or spending policies. However, the OBR’s forecasts do provide some early clues about future tax and spending pressures.

What does the Spring Forecast tell us about tax?

From a tax perspective, the OBR’s report suggests a tax environment that will feel increasingly heavy over the rest of the decade. Taxes as a share of GDP are projected to climb to 38.5% by 2030/31, a post-war high.

Much of this increase is driven by the freeze on income tax thresholds, which will continue until April 2031. Combined with rising wages, this means more people are being drawn into paying higher tax rates, even if their circumstances have not changed.

The state pension creates an interesting complication: from 2027/28 it is expected to exceed the personal allowance, bringing an estimated 600,000 more people into tax in 2026/27 and around 1 million by 2030/31. The government has said it does not intend for pensioners whose only income is the basic or new state pension to pay income tax during this Parliament. However, the final details of this policy, and how it will operate in practice, have not yet been announced.

The OBR notes that the increase in employer National Insurance contributions, which took effect last April, is also playing a significant role in the higher tax take. These increased costs may also influence business hiring decisions at a time when unemployment is forecast to rise to 5.3% in 2026, before falling to 4.1% by 2030.

Self Assessment payments are also expected to rise sharply in 2026/27, partly due to the non-domiciled tax regime being abolished in 2025/26 and a subsequent temporary repatriation facility being offered. If you have overseas income or assets, it remains important to review your tax planning carefully.

The strong performance of UK equity shares in recent months means that the OBR expects receipts from capital taxes to increase. If you hold UK equity shares, this may be a good time to review your holdings and consider whether crystallising gains now, rebalancing your portfolio and/or making use of available allowances could place you in a better tax position. Any such planning needs to navigate what are known as ‘bed and breakfasting’ rules (effectively selling and then re-purchasing), so please do get in touch if this situation applies to you.

The practical message from the OBR’s report is that tax planning is becoming ever more important, and capital taxes and transactions are likely to remain on the government’s radar. For individuals and businesses, this means keeping a closer eye on allowances, thinking about the timing of income, gains and dividends, and ensuring you are making full use of the reliefs available. Reviewing arrangements such as pension contributions, profit extraction strategies, and the way assets are held within a family may also reveal simple, practical steps that could help keep future tax bills under control.