2018 Spring Statement highlights
Chancellor Philip Hammond began his Spring Statement with positive projections for growth, inflation, debt and borrowing. Sticking to his promise of a speech free of tax changes, he focused on the economy, progress since the Autumn Budget and new tax consultations.
Five consecutive years of growth, year on year reductions in borrowing since 2010, and continued high employment rates, set an optimistic tone for the speech. Declaring that the economy had reached a ‘turning point’ the Chancellor re-iterated that he planned to hold to his ‘balanced approach’ towards investment. This meant no new spending announcements but a promise to announce a spending review in the Autumn.
Based on the findings of the Office for Budget Responsibility (OBR), Mr Hammond’s headline forecasts are:
- Growth to be 1.4% this year (higher than forecast by the OBR in November)
- Debt will begin to fall as a percentage of GDP in the coming tax year
- Inflation will drop back to target during the year
Updates on progress since the Autumn Budget included:
- Investment in the housing sector to raise the supply of homes
- Bringing forward the next business rate revaluation to 2021 and reducing the time between valuations to three years
- Inviting English cities to bid for a £840 million fund for local transport investment
- Releasing the first £95 million of the £190 million Challenge Fund announced in the Autumn to improve connectivity across the UK.
The Chancellor signalled a clear intent to use the tax system to change behaviours for the benefit of the environment, small businesses and the economy. To that end, he announced consultations on:
- Measures to end late payments in order to help small business cashflow
- Help for smaller businesses looking to take on apprentices
- Productivity mentoring – where the most productive businesses help the least productive
- Supporting people to get the skills they need
- The future of cash and digital payments
- An online sales VAT collection mechanism
- A tax reduction for the least polluting vans
- Tax on single use plastic bags
- Whether non-agricultural red diesel tax relief contributes to poor air quality in urban areas
Making good on its promises to be free of new tax change announcements, there is little in the Spring Statement for business owners and private individuals to action. We will keep an eye on developments over the next day or two and provide you with any updates that we feel are relevant to you.
Later this week, we will send you a more considered review of the announcements, along with some practical reminders of changes and opportunities that you need to be aware of as one tax year ends and another begins.
If you have any immediate concerns or queries about the impact of the Spring Statement on your tax affairs, please contact Anne-Maree Dunn or your usual WMT tax advisor.