Mr Hammond made clear some while ago that he wanted his Spring Statement to be a short financial briefing rather than a mini-Budget, complete with rabbit-out-of-hat announcements. Although his speech ran to 25 minutes, rather than the 15-20 that had been promised, the Chancellor stuck to a no-frills script.
There were no new tax measures and no spending changes. The Office for Budget Responsibility (OBR) trimmed its projections for government borrowing, but Mr Hammond simply banked the savings for his Autumn Budget. Spending will be subject to a detailed review in 2019.
While the Chancellor appeared to say little, his statement was followed by the publication of a range of documents covering areas including:
- English business rates: The next revaluation of business property in England will be brought forward one year to 2021, with three-yearly revaluations thereafter.
- Entrepreneur’s relief: A consultation paper was published on how to give entrepreneurs’ relief in circumstances where it would otherwise be lost because of a new share issue.
- VAT threshold: The government issued a call for evidence on restructuring the VAT registration threshold to offer more incentives for small businesses to grow. There is some evidence that businesses deliberately limit growth to avoid crossing the existing £85,000 threshold (which has been frozen for the next two years).
- Tax and the digital economy: There were several papers examining taxation issues surrounding the digital economy, including VAT and income tax leakage through internet trading platforms.
- Self-funded work-related training: A consultation paper was published examining how to extend the existing tax relief framework to self-funded work-related training by employees and the self-employed.
Many of these documents will eventually result in legislation, but that does not mean no tax changes in the interim. The impact of last November’s Budget (and some earlier measures) will soon be felt with the start of the new tax year.
Some of the key Spring Statement highlights include:
- Economic growth forecast for 2018 has been revised upwards from 1.4% to 1.5%. 2019 and 2020 forecasts have been left unchanged at 1.3%.
- £80 million have been allocated to small businesses promoting apprenticeships.
- £1.5 billion have been allocated to departments to prepare for Brexit in March 2019.
- Next business rates revaluation has been brought forward from 2022 to 2021.
- The Chancellor has evocated the need of reducing plastics waste and £20 million have been allocated to businesses and universities to encourage researches on the subject.
- A consultation has been launched on a new VAT collection system for online businesses.
- Borrowings are forecasted to drop to £45.2 billion for 2017-2018 which represents a £4.7 billion less than expected in November.
- The Government is seeking views on the role of cash in the current economy and preventing tax evasion and money laundering.
For further information on how the Spring Statement may affect you, contact us on 01923 224411.