HMRC still issues cheques when people don’t respond to rebate letters within 21 days – a legacy process that hasn’t fully adapted to the digital era. 1.74 million cheques were issued last year; although this is fewer than in the past, a significant number still go unclaimed.

HMRC is transitioning to a new system where cheques are only sent if someone specifically requests one. Around 20% of taxpayers are still on the old system, but HMRC aims to complete the switch by April next year.

Overpayments happen for common reasons such as job changes, incorrect tax codes or having multiple sources of income.

If you have an uncashed cheque from HMRC that was issued over six months ago, you will no longer be able to cash it. HMRC says it can be replaced on request.

The government wants to signal that Britain is ‘open for business’ and Ms Reeves has used the recent IMF meetings in Washington to promote the UK as a competitive destination for investment and residency. A senior Treasury official says geopolitical risk is reshaping where people choose to live and invest, and the UK wants to respond strategically.

The Treasury will launch a formal consultation on how Limited Liability Companies (LLCs) are taxed, as this has been a sticking point for potential wealthy arrivals. The review will look at targeted reliefs for new arrivals and possible reforms to offshore structures.

The Chancellor has faced criticism that her earlier tax increases drove millionaires out of the UK. The government hopes these new measures will reverse the exodus and bring high earners back.

The tax-free threshold for first-time buyers dropped from £425,000 to £300,000, increasing upfront costs. On average, buyers now pay about £4,618 more in stamp duty than before.

The change comes at a time when mortgage rates remain high, adding further pressure on new buyers. Over half (53%) of the extra revenue comes from property sales in London, with just under a quarter (23%) contributed from sales in the South East. Many properties in the North East and East Midlands remain below the £300,000 tax-free limit, contributing only 1.3% between them.

The premium increases depending on how long the property has been owned:

Under 2 years: double the standard rate

2–3 years: 300% surcharge

Over 3 years: full 500% premium

Empty homes are treated the same way. There are 35 second homes in Midlothian and only two are in Band G. So, this move is only expected to raise circa £200,000 in the 2026–27 financial year. But the council says the goal is behavioural change, not revenue – specifically to discourage second home ownership and free up housing for locals.

Scottish councils now have unlimited powers to set second home premiums. In England they are capped at 100% (double the standard rate), and in Wales it is up to 300%.

Critics argue they worsen the cost-of-living pressures, noting second homes already face an 8% additional dwelling supplement at purchase. The Adam Smith Institute warns extreme premiums could drive away investment and harm local economies.

Total gross HMRC tax and NICs receipts for April 2025 to January 2026 equalled £784.9 billion. This was £65.6 billion higher than the same period last year.

Income Tax, Capital Gains Tax & NICs Total were £460.7bn (up £52.0bn year-on-year). PAYE was £388.2bn (up £39.1bn). Self-Assessment brought in £70.3bn (up £12.8bn). January 2026 SA receipts are the highest on record.

Total VAT receipts were £154.3bn (up £9.0bn) with January 2026 VAT receipts being the highest on record. The growth was influenced by inflation and shifts in consumer spending.

Business Taxes, which include Corporation Tax, the Bank Levy, Digital Services Tax, and the Energy Profits Levy totalled £81.8bn (up £1.8bn). There were record-high December 2025 receipts due to strong onshore Corporation Tax receipts.

Stamp Taxes and Annual Tax Enveloped Dwellings (ATED) were £17.0bn (up £1.9bn). Receipts were influenced by Stamp Duty Land Tax (SDLT) rate changes, increased transaction volumes around Budget periods and the threshold changes effective from April 2025.

Inheritance Tax (IHT) totalled £7.1bn (up £0.1bn). The slightly higher receipts were linked to increased asset values and frozen thresholds (to 2030/31).

Critics argue her admission comes too late for businesses and workers already affected. The TaxPayers’ Alliance said the tax rise inevitably reduced job opportunities, pointing to rising youth unemployment. Some argue that reversing the employer NI increase would help businesses and improve job prospects for young people.

ONS data shows 957,000 young people (16 – 24) were classed as NEET (not in education, employment, or training) in the last quarter – an increase of 11,000 from the previous period.

Ms Reeves said that the Government was expanding apprenticeships and pointed to her ‘youth guarantee’ which promises paid work for young people who’ve been out of education or employment for 18 months.

Returning earlier than planned can trigger the UK’s five-year temporary non-residency rule, an anti-avoidance measure. If someone becomes UK-resident again within five full tax years, capital gains made abroad may become taxable in the UK. This is catching out people who sold assets while abroad assuming they were outside the UK’s tax scope.

Tax advisers say families are ‘troubled’ by the unexpected liabilities. Many did not consider residency day-count rules during an emergency evacuation. HMRC has updated guidance to allow war as an ‘exceptional circumstance,’ but accountants argue the rules remain narrow and restrictive.

Experts urge HMRC to take a more pragmatic and sympathetic approach given the extraordinary situation. Staying in the UK after the initial crisis often does not qualify as an exceptional circumstance under current rules.

IHT currently charges 40% on estates above £325,000, or £500,000 when a main residence is passed to children.

The IEA argues the tax penalises wealth that has already been taxed through income tax, NI, and VAT. It discourages investment and entrepreneurship and creates unnecessary administrative burdens (it costs the government £66m annually just to collect). It says even a cautious government could raise the tax-free threshold, reduce the 40% rate and simplify gifting rules.

The government recently faced backlash from farmers after attempting to remove tax breaks for family farms. Following protests, ministers reversed course and raised the agricultural assets threshold to £2.5m. So, it remains to be seen if further changes to the IHT system will be made.

The Spring Statement (March 03, 2026) speech was hoped to be “low drama” after the controversy surrounding last year’s one and the Autumn Budget.

Experts have called for stability, for example PensionBee says savers need clarity and consistency because retirement planning spans decades. Repeated changes make it “significantly harder” for people to feel confident about their decisions.

Frequent policy shifts can create uncertainty for investors, current pensioners and those planning for retirement. Stability helps people understand how today’s decisions will affect their future income.

Rachel Reeves stressed there would be a move back to one major fiscal event per year to restore stability after years of frequent Budgets and mini-Budgets. The Chancellor has said that the government aims to rebuild confidence among businesses and households.

She gave an update on government policies, the UK’s economic outlook, including forecasts for inflation, borrowing, and growth. We will look at some of these in more detail below.

Current economic backdrop

The UK recorded a £30.4bn budget surplus in January, double the previous year’s figure.

The Chancellor’s so-called fiscal headroom has increased from £21.7bn to £23.6bn, to help provide a buffer against unexpected shocks.

Inflation has fallen to 3% (in the 12 months to January 2026), improving the fiscal environment.

Fastest growth in the G7. The Office for Budget Responsibility (OBR) predicts 1.1% (down from 1.4%) for the remainder of 2026.

Future economic backdrop

The OBR’s forecast for GDP growth is 1.6% in 2027/28 and 1.5% in 2029/30. GDP should grow 5.6% over the term of this parliament, according to the Chancellor.

The Bank of England and the OBR believe inflation will drop faster than predicted last Autumn. It is expected to hit 2.3%, then 2% in 2027. Rachel Reeves says this is due to the action taken by her at the Budget and that the OBR’s forecast will show that the government’s choices “are starting to pay off”.

However, uncertainties in recent events unfolding in the Gulf are already influencing gas and oil prices. This could add 0.2% to inflation, but wider economic impacts remain to be seen.

The government is expected to reduce borrowing by £18bn, compared to the OBR’s Autumn forecast. The Chancellor stated that she is due to hit her main borrowing target in 2029/30 with over £23bn to spare.

The OBR updated its forecast on unemployment, believing those out of work but looking for a job will rise to 5.3% this year (up from their previous forecast of 4.9%).

Future Plans

The Chancellor has stated that she will set out “three major choices that will determine the course of our economy into the future” in a fortnight’s time.

She says that they will include harnessing the power of AI, removing trade barriers and strengthening the UK’s global relationships. This will spread opportunity around all parts of the country.

Changes to Tax Thresholds

Nothing was announced in the Chancellor’s address to parliament. As Rachel Reeves stated, this speech was more of an update on the economy and how government economic policies are working. Therefore, the tax changes announced in the Autumn Budget stand. As a reminder:

Minimum Wage and National Living Wage increase from April

16-17-year-olds and apprentices see a rise from £7.55 to £8.00 an hour.

Workers aged 18 to 20 receive an 85p increase to £10.85 an hour.

Over 21s will get an additional 50p an hour, making their minimum wage £12.71.

Income Tax

For England and Wales:

Personal allowance: 0% (first £12,570 earned)

Basic tax rate: 20% (annual earnings up to £50,270)

Higher tax rate: 40% (from £50,270 to £125,140)

Additional tax rate: 45% (Above £125,140)

For Scotland:

Starter tax rate: 19% (Up to £2,827)

Basic tax rate: 20% (from £2,828 to £14,921)

Intermediate tax rate: 21% (from £14,922 to £31,092)

Higher tax rate: 42% (from £31,093 to £62,430)

Advanced tax rate: 45% (from £62,431 to £125,140)

Top tax rate: 48% (above £125,140)

Income Tax and National Insurance thresholds

The threshold freeze has been extended to 2030/31.

VAT

It will remain at the existing levels for 2026/27.

Corporation Tax

Corporation Tax remains at 25%. The small profits rate and marginal relief also stay as they are. As do R&D reliefs.

There is a reduction to the main rate writing-down allowance from 18% to 14% from April. A new 40% first year allowance came into play from January 1, 2026.

Capital Gains Tax

CGT relief on business sales made to employee ownership trusts fell from 100% to 50% last November.

Inheritance Tax Thresholds

The IHT nil-rate bands will remain unchanged until 2031.

Pensions

Those in receipt of the full new state pension will see an annual increase of £575 from April. Those on the basic state pension will receive an extra £440.

Income from Savings, Dividends and Property

The tax paid on interest received from savings, and income from dividends and property rentals will increase by two percentage points. This will affect dividends from April and savings and property income a year later.

ISAs

Whilst expected, there were no further updates to ISA reforms.

Council Tax

No changes to the Autumn Budget were announced.

Business Rates

Despite pressure from the hospitality sector, no further reduction on business rates was announced.

Stamp Duty

There will be a three year “holiday” for companies newly listing on the London Stock Exchange.

Fuel Duty & new pay-per-mile scheme

Fuel duty will still gradually increase after September. It currently sits at 52.95p per litre.

Despite an outcry from owners of electric vehicles, they will still see a 3p per-mile scheme introduced from April 2028.

Gambling Tax

The Remote Gaming Duty increases in April from 21% to 40%. The bingo tax is being abolished in the same month.

Alcohol and Tobacco Duty

The alcohol duty rate increased in line with the Retail Price Index on February 1, 2026.

The tobacco duty rate increased in line with the RPI + 2 percentage points in November 2025 and will again by the same measure on October 1.

Two-Child Benefit Cap

This cap is still being abolished from April.

Public Transport & Energy Bills

Rail fares were frozen for one year from March 1, 2026.

The average energy bill will fall by £150 from April due to cutting levies. The Energy Company Obligation scheme is being scrapped.

1. Living beyond your declared means-if your lifestyle (cars, holidays, property) doesn’t match your reported income, HMRC’s data-matching systems may flag you. They compare bank data, land registry records, and even social media activity.
2. Running a cash-heavy business-businesses like restaurants, salons, and trades are considered higher risk. Poor record-keeping or unbanked cash can raise suspicion.
3. Late or incorrect tax filings-missing deadlines or frequently amending returns suggests disorganisation or possible avoidance.Repeated issues put you firmly on HMRC’s radar.
4. Mixing personal and business finances-sole traders often fall into this trap. It makes audits harder and can look suspicious. A separate business bank account is strongly recommended.
5. Unrealistic or excessive expense claims-HMRC algorithms flag unusually high expenses, especially for travel, meals, or home-office use. Claims must be wholly and exclusively for business.
6. Sudden or unexplained changes in income-sharp drops in turnover or profit without a clear reason can prompt scrutiny. HMRC expects documented explanations (e.g. losing a major client).

Good record-keeping and accurate reporting are essential. If you are unsure, please get in touch to discuss your situation to avoid unnecessary stress and costs.