The Spring Statement
2026
l the total value of company options that can be unexercised at any time will be increased from £3 million to £6 million; l maximum gross assets will be increased from £30 million to £120 million; l the maximum number of employees will be increased from 250 to 500. The maximum value of unexercised options an individual employee can hold remains £250,000. The limit on the exercise period will be increased from 10 years to 15 years. Existing contracts can be amended without losing the tax advantage the scheme offers. National Insurance Contributions (NICs) Thresholds and rates (Table D) There has been a great deal of debate about the effect on employment and business of the increases in employer NICs that took effect on 6 April 2025 following the Chancellor’s first Budget in October 2024. According to current plans, the £5,000 threshold above which secondary (employer) contributions become payable will remain fixed until April 2031. The Upper Earnings Limit for employee contributions is linked to the 40% income tax threshold, and is therefore also fixed to the same date. The Employment Allowance of £10,500 allows eligible small businesses to mitigate the cost of employer NICs, but is of marginal benefit to any business with more than a small workforce. The Lower Earnings Limit and Small Profits Threshold will be increased for 2026/27 in line with inflation at 3.8%, to £129 and £7,105 respectively. Voluntary payment of NICs Eligibility for the State Pension depends on a person’s record of paying NICs over many years. A full pension normally requires 30 years of contributions (35 for those starting work after April 2016). Anyone who is not already liable to pay NICs as an employee or self-employed person may pay voluntary Class 3 NICs to maintain their record and their entitlement. Self-employed people with small earnings have also been able to pay voluntary Class 2 NICs (which are significantly cheaper than Class 3). Up to now, there have been some minimal restrictions on paying Class 3 (or voluntarily paying Class 2) where the individual lives abroad: a person only needed to have been UK resident for 3 years in a row, or to have paid 3 years of NICs. This meant that it was possible for someone to qualify for a UK State Pension even though their connection to the UK was limited.
From 2026/27, it will no longer be possible to pay Class 2 voluntarily if not tax-resident in the UK. New applicants for paying Class 3 will have to have lived in the UK for ten continuous years or paid NICs for at least 10 years before becoming non-resident. A full contribution record to qualify for a pension will therefore require a much longer presence in the UK. Savings and Pensions Individual Savings Accounts (ISA) The investment limits for ISA have not changed since 2017/18: they are £20,000 for a standard adult ISA (within which £4,000 may be in a Lifetime ISA), and £9,000 for a Junior ISA or Child Trust Fund. These will now remain fixed until 5 April 2031. There will be changes to what an ISA can invest in from 6 April 2027 (covered later). As the annual CGT exempt amount has been reduced to only £3,000 and dividend and savings tax rates are increasing, investing through ISAs becomes relatively more attractive than investing in the same products outside an ISA. Apart from not having to pay tax, it is also not necessary to report the income and gains to HMRC.
Pension contributions (Table B) Each year there are rumours in advance of the Budget that there might be restrictions on tax-free pension lump sums or the amounts that can be invested with tax relief. The present Chancellor has so far made no changes to the reliefs available. The maximum amount that can be withdrawn as a tax-free lump sum remains £268,275, unless the person is entitled to ‘protection’ in relation to the original introduction of the Lifetime Allowance or any of the subsequent reductions of the limit. The only known change relating to pensions, announced in November 2025, is a restriction on salary sacrifice arrangements, due to take effect in April 2029 (covered later).
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