The Spring Statement
2026
The savings rate band remains at £5,000. Non-savings, non-dividend income (mainly salaries, business profits, rental income and pensions) is treated as the ‘first slice’ of income, using the tax-free allowance and the savings rate band; if any of the £5,000 band is not used by this ‘slice’, any savings income falling within that band is taxed at 0%. The November 2025 Budget also included an announcement of an increase to the rate of tax on savings and property income, but this will not take effect until April 2027 (covered later). Scottish and Welsh rates – 2026/27 (Table A) The Scottish government sets its own income tax rates for Scottish taxpayers for non-savings, non-dividend income. The 19% ‘starter rate’ is lower than the basic rate in the rest of the UK, but the top rate of 48% that applies above £125,140 is three percentage points higher. The Welsh government has similar powers but has not yet varied the main UK rates for Welsh taxpayers. The new rates on dividend (2026/27) and savings (2027/28) income will apply across the UK. The UK government has stated that it will engage with the devolved governments to provide them with powers to set different rates for property income if they so decide. This is because the ‘rest of the UK’ rate on property income will have increased by two percentage points in 2027/28. Employees Company cars (Table C) The basis for taxing company cars and fuel provided for private use is set out in the Table. Annual increases in the rates for use of the car have already been set for each year up to 2029/30 ‘to provide long-term certainty for taxpayers and industry’. Even if you do not change your car, the tax charge on it will be higher in each year as the rates increase (unless it is already at the maximum – although this is also being raised in 2028/29 and 2029/30,
by which time it will be 39% of list price rather than the current 37%). The rates are intended to provide a strong incentive to use electric vehicles, while rates for hybrids will be increased to align more closely with the rates for internal combustion engine vehicles. The figures used to calculate the following benefits all increase for 2026/27 by 3.8%, in line with inflation: l the benefit of free use of business fuel for private journeys (£29,200 x the car’s emissions-based percentage); l the taxable amount for the availability of a van for more than incidental private use (£4,170); l the taxable amount for an employee’s private use of fuel in a company van (£798). Expenses and benefits Where an employee incurs expenses ‘wholly, exclusively and necessarily in the performance of the duties of the employment’, they are normally entitled to tax relief – either by exemption of a reimbursement by their employer, or by claiming a tax rebate from HMRC. Up to now, this has included extra costs of working from home. From 6 April 2026, employees will no longer be able to claim a tax deduction for such expenses, if they are not reimbursed by their employer. Employers will still be able to reimburse such costs without deducting income tax or NICs, as long as they can be shown to be ‘wholly, exclusively and necessarily incurred’. HMRC accepts that up to £6 per week can be reimbursed tax-free, without the need for evidence of the additional costs incurred due to working from home. By contrast, the income tax and NICs exemption for employer-provided benefits will be extended from 6 April 2026 to cover reimbursements for eye tests, home working equipment, and flu vaccinations. Eye tests have qualified for exemption only if the employer paid for them directly, and flu vaccinations were not covered by the limited exemption for medical screening. Enterprise Management Incentive (EMI) Scheme Under this scheme, employees and directors can be granted options over shares in the company for which they work. Currently, no Income Tax or NICs arise if options are exercised within ten years of being granted. Other conditions apply. For eligible companies, the following limits will apply to EMI contracts granted on or after 6 April 2026:
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