On 3 March 2026, the Chancellor delivered the UK’s Spring Forecast, providing an update on the economy and public finances.
Unlike a full Budget, the Spring Forecast is now intended to be primarily an economic update, with major tax policy changes reserved for the Autumn Budget. This means the announcement was relatively light on new tax measures.
However, there are still several points worth noting - let’s look at the key takeaways.
No Major New Tax Changes (For Now)
There were no significant new tax announcements affecting small limited companies.
Instead, the government focused on:
Updated economic forecasts
Inflation outlook
Borrowing projections
Labour market trends
Major tax decisions are expected to remain concentrated in the Autumn Budget, as part of the government’s commitment to only one major fiscal event per year. For a refresher on the tax changes announced in the Autumn Budget, see our blog here.
For business owners, this means stability in the short term—but we may still see changes later in the year.
Dividend Tax Rates Increasing From April 2026
As announced in the Autumn Budget, from April 2026:-
New rates will be:
Basic rate: 10.75% (up from 8.75%)
Higher rate: 35.75% (up from 33.75%)
Additional rate: 39.35%
The dividend allowance remains £500.
Since many limited company directors take income through a salary plus dividends strategy, this increase means the overall tax cost of extracting profits will rise slightly.
Director should review the below (and we will be working on this with our clients over the next few months):
Your salary/dividend mix
Pension contributions
Timing of dividend payments
Corporation Tax Rates Remain Unchanged
The government confirmed that Corporation Tax rates remain unchanged:
19% on profits up to £50,000
25% on profits above £250,000
Marginal relief between those thresholds
The government has committed to keeping the main rate capped at 25% for the duration of this Parliament.
For most small limited companies, profits typically fall within the small profits or marginal band, so the practical impact remains similar to recent years.
Economic Outlook: Slower Growth
The Office for Budget Responsibility also updated its economic forecasts.
Key points include:
UK growth for 2026 revised down to around 1.1%
Unemployment expected to rise to around 5.3% before falling again
Growth expected to strengthen in later years.
However, forecasts still expect moderate economic growth over the next few years.
What This Means for Small Limited Companies
For now, the Spring Forecast brings continuity rather than disruption.
The main takeaways are:
✔ No major new tax changes
✔ Dividend tax rising from April 2026
✔ Corporation Tax staying capped at 25%
✔ Economic growth forecast lowered
In practice, most directors of small limited companies will continue operating under the same tax framework introduced in recent years.
But with increasing dividend tax and ongoing economic uncertainty, tax planning and cash-flow management remain important.
Final Thoughts
While the Spring Forecast didn’t introduce dramatic policy changes, it reinforces an important message: the tax landscape for limited companies remains relatively high and complex.
This makes it even more valuable to:
plan income extraction carefully
review your tax strategy regularly
ensure your company structure still works for you.
If you’d like help reviewing your salary, dividends and tax efficiency for the coming year, we’re always happy to talk. For our clients, we will be in touch in the next month or so with our tailored thoughts and recommendations.
If you have any questions on how the Budget impacts you, please get in touch!
Written by:
Nicola J Sorrell - Effective Accounting
Founder | Xero Champion | IR35 Expert
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