The Spring Statement
2026
l more than one agency, the rules apply to the agency that has the direct contract with the end client to supply the worker; l no agency, the rules apply to the end client. Corporation Tax Rate of tax The rates of corporation tax have not changed, and the 2024 Budget appeared to rule out changes for the life of the Parliament. The main rate is 25% for companies with profits over £250,000. The ‘small profits rate’ remains 19% for companies with profits of up to £50,000. Between £50,000 and £250,000 there is a tapering calculation that produces an effective marginal rate of 26.5% on profits between these limits, but an average rate on all profits of between 19% and 25%. The limits are divided between companies that have been under common control at any time in the previous 12 months, whether UK resident or not. Late filing From 1 April 2026, the penalties for late filing of corporation tax returns will be doubled. They will become £200 for any lateness (£1,000 for the third successive offence); a further £200 (or £1,000) if the return is still not filed after 3 months; and tax-geared penalties of 10% of the amount unpaid if they are still not filed after 6 months and again after 12 months. R&D claims: advance assurance Claims for research and development tax relief can be very beneficial, but have also led to disputes about the eligibility of the taxpayer or the expenditure. For many years, HMRC has offered an ‘advance assurance’ service so certain claimants can confirm that they are eligible before submitting the claim. The conditions for the service have been restrictive and take-up has been low. Following a consultation in 2025, in November the Chancellor announced that HMRC would run a pilot of an improved service in the spring of 2026. However, this does not appear to have been made available by early March. Value Added Tax Gifts to charity Where a business disposes of business assets for no consideration, it may be liable for output tax to recover input tax that was claimed on the purchase of the asset. This could apply to gifts of goods to charity, even if the business intended to support a good cause, and even if the goods were surplus to the business’s requirements. A specific relief applied
to gifts of goods for a charity to sell or to export, but not for gifts in general. A new VAT relief will be introduced from 1 April 2026 for business donations of goods to charity which are for distribution to those in need or for use in the delivery of their charitable services. There is a monetary limit on the cost of individual items – £200 for a specified list including computers, mobile phones and furniture, and £100 for assets in general – but no limit on the total that can be given. It would therefore be possible, for example, for a manufacturer to donate a large quantity of low value items without incurring a VAT charge. Motability The Motability scheme enables eligible people to buy vehicles that are adapted to enable them to use, and provides some VAT reliefs. With effect from July 2026, 20% VAT will be applied to top-up payments that a user can make to have a more expensive vehicle through the scheme. Other measures Making Tax Digital for Income Tax (MTD IT) The requirement to file tax returns using MTD IT will come into effect from 6 April 2026. Those initially affected by the rules will be those with annual income from a sole trader business or property, or both together, of £50,000. The measure of income for this purpose is gross turnover and gross rental income, not taxable profit. This will drop to £30,000 from 6 April 2027 and £20,000 from 6 April 2028. Anyone who will be affected by these rules should make sure they understand the requirements and are ready to comply with them. Income and expenditure must be recorded using MTD IT functional software; the software will be used to make quarterly electronic reports of income and expenses to HMRC, and to submit a ‘finalisation statement’ covering the whole tax year by 31 January following the end of the tax year. Bear in mind that those affected by MTD IT will be submitting quarterly returns for 2026/27 at the same time as preparing the 2025/26 tax return under
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