Spring Statement 2026 summary

Tax changes that will take effect from April 2026

Several taxation changes will take effect from April 2026, some of which could have a significant impact on personal and business planning.

Business Relief (BR) and Agricultural Property Relief (APR) will be restricted

From April 2026, the first £2.5 million of combined agricultural and business property will qualify for BR and APR relief at 100%. Any value above £2.5 million will only obtain relief at 50%. This will effectively reduce the main IHT rate from 40% to 20%. Helpfully, the £2.5m allowances is transferrable between spouses, which may require reassessment of estate planning.

In addition, the rate of BR that applies to AIM shares will be reduced from 100% to 50%, without the first £1 million receiving 100% relief.

If you’d like to understand more about these changes, you can listen back to our Inheritance Tax planning webinar.

Equity reward and share schemes

The Enterprise Management Incentive (EMI) scheme has been widened with the employee limit increased from 250 to 500 employees, gross assets from £30m to £120m, and the limit of EMI options can be extended from £3m to £6m per company. In addition, the maximum length of EMI option periods has been increased from 10 years to 15 years.

From an administration perspective, the requirement to notify HMRC of the grant of EMI options is being abolished from April 2027. This is great news for businesses and means that more employees and businesses can benefit from the great tax advantages on offer within EMI.  These can include: no income tax or national insurance due on grant; no tax on exercise, provided the options were granted as market value; CGT on disposal of shares.  There are a number of rules to follow to ensure these benefits are achieved. 

Enterprise Investment Scheme and Venture Capital Trusts

There has been an expansion of the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) investment limits, moving from an annual limit of £5m to £10m while increasing the lifetime limit from £12m to £24m in April 2026. Knowledge Intensive Company limits will move from £10m to £20m annual limit and £40m lifetime limit at the same time.  In addition, the gross asset limit will increase to £30m before the share issue and £35m after the share issue, from £15m before and £16m after currently.

EIS investments can attract 30% income tax relief up to a certain threshold, and disposals of EIS shares are free from CGT.  Again there are a number of rules to follow to obtain these reliefs.

National Living Wage and National Minimum Wage

From April 2026, the NLW for workers will rise

• aged 21+ will rise to £12.71 per hour (+4.1%).
• 18–20-year-olds: hourly rate increases by 8.5% to £10.85.
• 16–17-year-olds and apprentices: minimum hourly rate set at £8.00 (+6%).

Income tax and NIC exemptions

From April 2026, the income tax and NIC exemption for employer-provided benefits will be extended to cover reimbursements for eye tests, homeworking equipment, and flu vaccinations, a welcome simplification that reflects calls for change. 

Tax changes that will take effect from April 2027

ISAs 

The overall ISA allowance will remain at £20,000, but the cash ISA allowance will be reduced to £12,000 from April 2027 for those under 65, with over 65s being exempt from the cash ISA changes.

This change is intended to push more savers towards investing, rather than holding surplus cash, however the benefit to the UK economy could be limited as there is no measure or mandate to state the investment must be with a UK company.

A small rise in the uptake of investment ISA savings is likely, but many risk‑averse savers will continue to hold cash through Premium Bonds or short‑dated gilts, which remain tax‑efficient and low‑risk alternatives to investing.

IHT on unused pension funds and death benefits

From 6 April 2027, unused pension funds and most pension death benefits will fall within the scope of Inheritance Tax. Personal representatives will be able to instruct pension scheme administrators to withhold up to 50% of taxable benefits for up to 15 months to help settle any IHT due. Once HMRC clearance has been issued, PRs will be released from liability for any pension assets discovered later. Although the rules are confirmed, some of the technical detail is still being developed, so elements may evolve as guidance is finalised.

Year-end tax planning 25/26 tips

As the new tax year approaches, it’s important to review your personal allowances and plan ahead to make the most of upcoming changes. Taking proactive steps now can ensure you’re making informed decisions for your financial well-being.