Spring Statement roundup
14 March 2018
The Chancellor’s new Budget cycle regime started in earnest on 13 March with a brief Spring Statement focusing mainly on the updated economic forecasts of the Office of Budget Responsibility (OBR).
The OBR’s forecasts for Government borrowing and debt were, for the most part, more favourable than its forecast in autumn 2017. However, its view of future UK growth was less optimistic – estimating annual growth at 1.5% in 2018 and even lower in later years until it recovers to 1.5% by 2022. Yet the OBR is not as pessimistic as the OECD: its recent forecast for UK growth (1.3% in 2018) puts the UK at the bottom of the G20 growth league.
Aside from the macro-economic forecasts, the Chancellor did give some updates on how Government investment programmes are going (eg, how funding support for house building has been allocated). However, probably the most important announcement was that at the Autumn Budget he will “…set an overall path for public spending for 2020 and beyond” and that there will be a full Government Spending Review in 2019.
True to his promise, the Chancellor announced no entirely new tax proposals. He did give some updates on previous announcements and ongoing consultations. There were also a number of ‘calls for evidence’ (research prior to specific proposals) which are to be a feature of the new, more ‘considered’ approach to introducing new tax legislation. The highlights were:
- Taxing digital businesses – confirming the Government’s commitment to UK generated ‘value’ (both in cooperation with other countries and the OCED and through transitional arrangements that could include turnover taxes – read more on the original proposals)
- Tackling the plastic problem - a call for evidence on potential environmental tax measures to reduce single use plastics
- Entrepreneurs’ Relief from capital gains tax - a technical consultation on potential changes “to ensure that it does not discourage entrepreneurs from seeking external finance for their companies”
- Enterprise Investment Scheme - a consultation on the possible introduction of a new “approved fund structure” within the EIS rules to allow pooled investment in knowledge intensive companies
- Business Rates - an update on the recent consultation confirming that the next revaluation will take place in 2021, with revaluations on a three-year cycle thereafter
- Online tax issues – a consultation on whether a ‘split payment’ mechanism could reduce VAT fraud and a related consultation on the role of online platforms’ in ensuring tax compliance by their users
- Cash and digital payments - a call for evidence on the use of different payment methods in the new economy.
- Tax security deposits – consultation on extending them to cover corporation tax and the construction industry scheme where businesses have a history of non-compliance or in cases of phoenixism
- Self-funded work-related training – a consultation on extending tax relief for employees and the self-employed to cover “upskilling and retraining” costs
- VAT registration threshold - a call for evidence on the options for changing the threshold rules to remove disincentives for small businesses to grow
- Tourism in Northern Ireland – a call for evidence on the impact of VAT and Air Passenger Duty
- Heated tobacco products – confirmation that the Government will introduce a new category of tobacco duty for heated tobacco products in Finance Bill 2018-19.
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