Key changes to be aware of following March’s Spring Statement.
In March, in the midst of the ongoing Brexit drama, the Chancellor, Philip Hammond, delivered his Spring Statement on the state of the economy. Mr Hammond made clear some while ago that he wanted his Spring Statement to be a short financial briefing and he stuck to a no-frills script. His vision was that in March he would be presenting a brief response to the latest forecasts from the Office for Budget Responsibility (OBR). As the Treasury website stressed, “There will now only be one major fiscal event each year”.
There were no new tax measures and only minor spending changes. The Office for Budget Responsibility (OBR) trimmed its projections for government borrowing, but Mr Hammond kept his powder dry for the forthcoming Spending Review. The OBR’s calculations explain why Mr Hammond did not mention fresh tax cuts, as opposed to maintaining low tax levels.
In this new 2019/20 financial year, government borrowing is projected to increase by £6.5bn and to still be £13.5bn by 2023/24. Income tax and national insurance contribution receipts have been rising faster than expected and are the main reason why the OBR’s overall finance figures looked rosier in March than last October.
While the Chancellor may have appeared to say little, his statement was followed by some announcements and the publication of a range of documents covering areas including:
- Making Tax Digital (MTD) – the government confirmed a light touch approach to penalties in the first year of MTD’s implementation. MTD will not be extended to any new taxes or businesses in 2020.
- Apprenticeship Levy – the timing of the reduction in the co-investment rate for employers from 10% to 5%, and the increase to 25% in the amount that employers can transfer to their supply
chains, will be brought forward. These changes will take effect from April 2019.
- Draft legislation for the new structures and buildings allowance for investments in non-residential structures and buildings announced in the 2018 Budget. The relief will be given as an annual 2% flat rate over 50 years for new commercial structures and buildings.
- Review of time limits for the recovery of lost tax involving an offshore matter, comparing them with other time limits. It will set out the rationale for the charge on disguised remuneration loans and will be laid by 30 March 2019.
- CGT private residence relief changes announced in the 2018 Budget to lettings relief and the final period exemption.
These documents are likely to result in legislation following the Autumn Budget. As has been the case for some years now, if you want to see your tax bill reduce, the starting point is not to wait for government action, but to review your personal opportunities for improved tax planning.