Spring Statement: how to safeguard your wealth ahead of the fiscal event

The chancellor is set to deliver the Spring Statement on 26 March, which could have a telling impact on personal finances. 

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Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “While the chancellor has earmarked the Spring Statement to provide an update on the government’s growth mission, with the Autumn Budget being the sole major economic event of the year, uncertain economic conditions could force her hand.

“An underperforming economy and gyrations in financial markets, in part stoked by President Donald Trump’s trade wars, are among other factors that could force the government to make some unpopular decisions so as not to breach self-imposed rules on borrowing. Specifically, high gilt yields, which represent the UK government's cost of borrowing, are a key concern - potentially impacting borrowing costs and threatening the sustainability of the public finances.”

Key speculation ahead of Spring Statement 

• Welfare reform: the government has already signalled cuts to welfare spending. The chancellor has stated that the current welfare regime “isn’t working for anyone.”

Mooted changes include tightening Personal Independence Payment (PIP) criteria, implementing stricter anti-fraud and jobseeker requirements, and improving employment support for disabled people.

These proposals have sparked debate, with concerns that they could push vulnerable individuals into financial hardship. However, the government argues that the changes are necessary for economic sustainability.

• Fiscal drag extension: the Chancellor may extend the current freeze on income tax bands and allowances beyond April 2028 - potentially until 2030. This strategy, known as “fiscal drag,” increases tax revenue as inflation and wage growth push taxpayers into higher tax brackets.
• ISA reforms: the Chancellor had reportedly been considering a £4,000 annual cap on cash ISA contributions to encourage investment in stocks and shares ISAs and stimulate the UK stock market. However, recent reports suggest that these proposed reforms have been postponed and will not feature in the fiscal event.
• Economic forecasts and fiscal rules: the Office for Budget Responsibility (OBR) may revise growth projections, reflecting higher inflation (rising to 3%), increased government borrowing costs, and reduced fiscal headroom from the October Budget’s £9.9 billion surplus. These developments could pressure the chancellor to introduce tax increases or spending cuts to remain within fiscal rules.

How to safeguard your wealth ahead of the Spring Statement

With speculation mounting over the extension of the deep freeze to tax thresholds, welfare cuts and changes to the ISA regime, Myron Jobson outlines steps to safeguard wealth ahead of the fiscal event.

Use your tax allowances before they’re gone

“While the much-discussed plan to lower the cash ISA allowance appears to have been shelved for now, the speculation serves as a timely reminder to maximise your ISA allowance while you still can. ISAs shield your savings and investments from capital gains and income tax - an invaluable benefit that could be reduced in a bid to raise revenue.

“Higher earners should also consider making full use of their pension annual allowance - currently £60,000 or up to their annual earnings. Pension contributions attract tax relief, effectively boosting retirement savings with ‘free’ government money. Given ongoing speculation about pension tax relief reform, locking in contributions under the current system could be a prudent move.”

Beat fiscal drag

“The freezing of tax thresholds means more people are being dragged into higher tax bands - so-called fiscal drag. This is the ultimate stealth as people might not realize they are paying more in taxes simply due to inflation.

“Pension contributions can reduce your taxable income while boosting your retirement nest egg. Paying more into a workplace pension via salary sacrifice, means that you’d also save on national insurance.

“However, it may impact entitlements like maternity pay or mortgage applications, so consider the broader financial implications.

“If you’re married or in a civil partnership, using the Marriage Allowance or shifting assets to a lower-earning spouse can help optimise tax efficiency.” 

Avoid tax cliff edges using pension contributions

“For high earners, pension contributions can reduce your adjusted income, helping them help avoid the punitive 60% effective tax rate that applies to those earning between £100,000 and £125,140, where the personal allowance is gradually withdrawn. For parents, this strategy could also help them remain eligible for the government’s Free Childcare and Tax-Free Childcare schemes.

“Also, for those at risk of losing child benefit due to the High Income Child Benefit Charge (£60,000 threshold), pension contributions can reduce their adjusted net income and keep benefits intact.”

Brace for inheritance tax tweaks

“Inheritance tax (IHT) remains a political hot potato. The new Pensions Minister, Torsten Bell, recently stated that the government plans to bring pensions into IHT calculations from April 2027. While there’s always speculation about reform, the current regime means estates over £325,000 (potentially rising to £500,000 if you leave a home to direct descendants) face a 40% tax hit. The impending changes will require many people to rethink their estate planning strategies.

“Gifting assets early - using the £3,000 annual gift allowance or regular gifts out of income—can help mitigate the tax burden for your heirs. Setting up a trust could also be a useful way to pass on assets in a tax efficient manner. There is no one-size-fits-all solution for estate planning. It is worth consulting a financial adviser to help you identify the solutions which will most benefit your individual situation and goals “

Stay flexible and informed

“Finally, don’t make knee-jerk reactions based on speculation alone. The best financial plans are adaptable. Keeping a well-diversified portfolio, using tax-efficient wrappers, and staying on top of rule changes will keep your finances resilient.”