Tax E-News – March 2026

Welcome to the March 2026 edition of Tax E-News. We hope that you find this informative. Please contact us if you wish to discuss any matters in more detail.

SPRING FORECAST

During a week dominated by news of the Middle East conflict, on 3 March 2026, Chancellor Rachel Reeves presented the Spring Forecast to Parliament. The Chancellor told MPs she had “restored economic stability” as she presented the Office for Budget Responsibility’s (OBR’s) economic forecasts.

The Chancellor focused on how the government’s policies are delivering economic growth, particularly when looking at Gross Domestic Product (GDP) per person. However, the OBR’s report indicates a more nuanced picture and notes that the fiscal context for the next Budget will remain challenging.

As part of the government’s policy of one major fiscal event a year, the Chancellor announced no new tax or spending policies. However, the OBR’s forecasts do provide some early clues about future tax and spending pressures.

What does the Spring Forecast tell us about tax?

From a tax perspective, the OBR’s report points to a tax environment that will feel increasingly heavy over the rest of the decade. Taxes as a share of GDP are projected to climb to 38.5% by 2030/31, a post-war high.

Much of this increase comes from the freeze on income tax thresholds, which will continue until April 2031. Combined with rising wages, this means more people are being pulled into paying higher tax rates, even if their circumstances have not changed. 

The state pension creates an interesting complication: from 2027/28 it is expected to exceed the personal allowance, bringing an estimated 600,000 more people into tax in 2026/27 and around 1 million by 2030/31. The government has said it does not intend for pensioners whose only income is the basic or new state pension to pay income tax during this Parliament. However, the final details on this policy and how it will work in practice have not yet been announced.

The OBR notes that the increase in employer national insurance contributions, which took effect last April, is also playing a significant role in the higher tax take. These increased costs are potentially feeding into business hiring decisions at a time when unemployment is forecast to rise to 5.3% in 2026, before falling to 4.1% by 2030.

Self assessment payments are also expected to rise sharply in 2026/27, partly due to the non-domiciled tax regime being abolished in 2025/26 and a subsequent temporary repatriation facility being offered. If you have overseas income or assets, it is still important to carefully review your tax planning. […]

MAKING TAX DIGITAL FOR INCOME TAX – TIME IS TICKING

We are continuing to work with a number of our clients as they prepare for Making Tax Digital (MTD) for income tax. This is the new regime for self-employed individuals and landlords that will start to apply from April 2026 if they have business and/or property income (i.e. total takings, not net profits) of more than £50,000 per annum. The regime requires digital record-keeping and quarterly updates to HMRC, with the first such update due by 7 August 2026. […]

OVERPAYMENT RELIEF FROM HMRC

If you have paid too much tax, perhaps because you made an error on a return, or because you believe a sum determined by HMRC as being due is incorrect, there is a general rule that a refund cannot be claimed more than 4 years after the end of the relevant tax year. For example, a refund claim in relation to the 2021/22 tax year would need to be made by 5 April 2026.

However, if you do believe you’ve paid too much tax in the past, you may be able to claim it back through a mechanism known as “overpayment relief”. This is a formal claim made to HMRC, and it serves as a vital safety net. Understandably, HMRC checks on any such claims are thorough and a number get rejected. […]

ADVISORY FUEL RATES FOR COMPANY CARS

HMRC have published new advisory fuel rates from 1 March 2026. These are the suggested reimbursement rates for employees’ private mileage using their company car. Where the employer does not pay for any fuel for the company car, these are the amounts that can be reimbursed in respect of business journeys without the amount being taxable on the employee.

The petrol, diesel and home charging rates have remained static this quarter, while the LPG and public charging rates have changed. […}

Employees using their own cars

For employees using their own cars for business purposes, the Advisory Mileage Allowance Payment (AMAP) tax-free reimbursement rate continues to be 45p per mile (plus 5p per passenger) for the first 10,000 business miles, reducing to 25p per mile thereafter.

Input VAT

Within the 45p/25p AMAP payments, the amounts in the above table represent the fuel element. The employer is able to reclaim 20/120 of the fuel amount as input VAT provided the claim is supported by a VAT invoice from the filling station. For a 1300cc petrol-engine car, 2p per mile can be reclaimed as input VAT (12p x 20/120).

EMPLOYER-PROVIDED VEHICLES AND TAXABLE BENEFITS IN KIND

On the topic of company cars, it should be remembered that as we head into a new tax year, the flat-rate figures used in the computation of some employer-provided vehicle benefits-in-kind calculations will be increased for inflation. From 6 April 2026: […]

SOURCING LABOUR FROM THIRD PARTIES? DUE DILIGENCE REQUIRED!

Just a final reminder for any businesses sourcing workers from third parties (e.g. through agencies or ‘umbrella companies’) that new rules come into effect from 6 April 2026 that may make you jointly and severally liable for the PAYE and NIC costs of those workers, should the third party fail to pay HMRC. To avoid unexpected tax costs, we strongly recommend that supply chains are reviewed and the new rules are understood.

DIARY OF MAIN TAX EVENTS

MARCH  / APRIL 2026