Chancellor Philip Hammond has, again, shown his commitment to keeping the Spring Statement a low-key affair, certainly, at least, in relation to public spending and tax initiatives.
This time around, Hammond largely spent time summarising key points from the updated economic forecast from the Office for Budget Responsibility (OBR). Although he presented the numbers positively, the OBR was mildly pessimistic in its presentation, particularly around a reduced estimate for growth in 2019, down from 1.6% to 1.2%.
In political terms, however, the main topic of the Chancellor’s speech was focused on Brexit, perhaps inevitable as it was sandwiched between the second parliamentary vote on the Prime Minister’s Brexit deal and a follow-up vote on whether or not to leave the EU with no deal.
Mr Hammond used his 35-minute speech to reiterate the likely impact of leaving the EU without a deal – “significant disruption in the short and medium-term and a smaller, less prosperous economy in the long-term”.
In its own way the speech was quietly pointed: wouldn’t it be nice to continue on a straightforward path, with few surprises? Wouldn’t it be good to keep investing in, rather than shoring up, the economy? Trying to carry on with "business as usual", as it were.
Below is a summary of the announcements and for more detail you can download our full report here.
- The government will take what it calls a “light touch” approach to penalties in the first year of mandatory digital VAT record keeping (Making Tax Digital, which comes into force on 01 April 2019 for businesses over the VAT threshold).
- From 06 April 2019, workplace pension contributions increase from 2% to 3% for employers and from 3% to 5% for eligible employees.
- The intention to cut the rate of Corporation Tax to 17% in 2020/21 remains on course.
- The Income Tax personal allowance will rise to £12,500 from 06 April 2019 in England, Northern Ireland and Wales, but remain the same in Scotland (already £12,500).
- The Capital Gains Tax annual exempt amount for individuals rises from £11,700 to £12,000 from 06 April 2019. At the same time, the annual exemption for trusts increases from £5,850 to £6,000.
- The overall annual ISA subscription limit remains at £20,000, although the junior ISA allowance increases to £4,368.
- The VAT registration threshold is to stay at £85,000 until April 2022.
- The lifetime allowance, which is the maximum amount an individual can draw from pensions without incurring extra tax charges, rises to £1.055 million.
- It was announced that, since 2010, the government has introduced more than 100 measures to reduce tax avoidance, evasion and other forms of non-compliance.
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If you have any questions about the measures announced in the Spring Statement, please give us a call on 01483 205890