This year’s Spring Statement was not the time for ground-breaking tax or spending announcements. Since the abolition of the annual Spring Budget, the major fiscal event is now reserved for the autumn, and with the Government caught in the midst of Brexit turmoil, no doubt the Chancellor was prepared for an especially low-key event when he delivered his speech to the House.
Despite ongoing uncertainty around our exit from the EU, the Chancellor gave a reassuring message that the ‘economy, itself, is remarkably robust’. However, this stands in contrast to the OBR who is slightly more pessimistic by cutting the growth forecast to 1.2% for 2019, down from a previous estimate of 1.6%.
Although substantial announcements were scarce, the following points were outlined in the Government’s supporting documents:
- Tax Avoidance – The Government will continue to clamp down on tax avoidance, evasion and non-compliance. Consultations and reports are due on several areas, including the abuse of the R&D tax credit scheme for small businesses.
- Making Tax Digital – Mandatory digital record-keeping will go ahead for affected businesses from 1st April. However, good news for business as the Chancellor has confirmed there will be a ‘light touch approach to penalties’ for the first 12 months following the rollout.
- National Minimum Wage – As part of the Government’s bid to end low pay, Hammond confirmed that there would be a review of the National Minimum Wage (NMW) and National Living Wage (NLW). Reviews will consider the impact of minimum wages and the way they are set.
- Apprenticeship Levy – Reforms to the levy will be brought forward, meaning that from April 2019, the co-investment rate will be halved to 5% and the amount employers can transfer to their supply chains will increase to 25%.
As MPs continue to debate Brexit, the Chancellor didn’t commit to plans for a full fiscal event this summer, so it remains to be seen whether a no-deal Brexit would lead to calls for an emergency Budget. On the whole, Hammond’s review was a subdued affair.
Click here for a more detailed analysis of the Spring Statement.