Chancellor’s Spring Statement Explained

14/03/2018

Yesterday, the Chancellor of the Exchequer Philip Hammond, delivered his first spring statement.

The statement was a fairly low-key affair as intimated by the Treasury over the weekend, with no major policy announcements or tax and spending measures.

That said, the Chancellor did highlight potential future policy changes and signalled areas where he would like to consult ahead of the next Budget.

There were a number of announcements of direct relevance to bacta including, a consultation on cash and digital payments and a review into VAT paid by small businesses – to explore measures to ameliorate the current situation where companies have to register for VAT when their annual turnover reaches £85,000.

Below is a roundup from bacta of the announcements made:

Small businesses

  • A review into VAT paid by small businesses – with a gradual introduction of VAT on firms with a turnover of more than £85,000 a year
  • A consultation on a new VAT collection mechanism for online payments
  • Revaluation of business rates to be brought forward to 2021 and revalued every three years
  • A consultation on cash and digital payments
  • A consultation examining ways to help small businesses deal with late payments

Education and Skills

  • £500m for T-levels and £50m to help employers roll out placements for T-level students
  • £80m of funding will be released to support small businesses to engage with apprentices
  • A consultation on the extension of tax relief for training by employees and the self-employed to support upskilling and retraining

Employment

  • National Living Wage will rise by 4.4% from £7.50 per hour to £7.83 per hour from April 2018 (announced in Autumn Budget 2017).

Tourism

  • A call for evidence on the impact of VAT and Air Passenger Duty on tourism in Northern Ireland

Economy

  • In 2019 growth is forecast to be 1.3%, then 1.3% in 2020, 1.4% in 2021, and 1.5% in 2022
  • Forecast for borrowing of £45.2bn in 2017-18, revised down from £49.9bn. That is equivalent to 2.2% of GDP
  • Borrowing is forecast to be 1.8% of GDP in 2018-19, 1.6% in 2019-20, 1.3% in 2020-21, 1.1% in 2021-22, and 0.9% in 2022-23
  • Chancellor announced he will increase public spending and investment in years ahead if public finances continue on this improved path. Confirms detailed spending review in 2019

 

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