The first ever Spring Statement was billed as a 15 minute speech updating the country on the fundamental fiscal position, and was not intended to include any tax policy changes in line with the promise to only have one “Budget” event in the year.
In the event the Chancellor was true to his word, albeit he stood up for more like 25 minutes. He was very positive about the economic outlook, commenting “If there are any Eeyores in the chamber they are over there. I meanwhile am at my most positively Tiggerlike today, as I contemplate a country which faces the future with unique strengths.”
What he has painted for us is a picture of how the UK has been outperforming all predictions over the last few months, although we are not yet seeing an end to the austerity just yet in terms of the squeeze on public sector finances.
Headlines of the statement include:
- The manufacturing sector now showing the longest period of continuous growth for over 50 years
- Employment up by over 3 million since 2010, with unemployment “close to a 40 year low”
- Borrowing down by three quarters since 2010
- More funds being earmarked for public services and infrastructure.
A number of consultations and calls for evidence have been published, none of which are a real surprise, but are likely to lead to policy and tax changes by the time we get to the 2018 Autumn Budget. These include:
- A consultation on taxing the often multinational “digital economy”
- Consultation and call for evidence on plastic waste. This follows what has been a very successful tax on single use carrier bags which has vastly decreased the amount of waste in that area. Separately from today’s statement it is interesting to see that the Sugar Tax is already resulting in major drinks companies changing their recipes before the tax is even introduced. While this means less revenue for the Exchequer, it does mean that these taxes are doing what the government set out to do in that they are changing behaviours for the benefit of health and the environment.
- Consulting on relaxing the rules for Entrepreneurs’ Relief where an investor owning the required 5% has his shareholding diluted to below 5% because of further incoming investors.
- Call for evidence and consultation around the cashless economy and what changes this may require to our tax systems.
- Call for evidence around changes to the VAT registration threshold. This follows recommendations from the independent Office of Tax Simplification that a lower threshold in line with other nations is appropriate.
In a nutshell there is nothing substantive in the statement, which is what we expected, but some useful information as to where future policy changes are likely to lie. As ever we will be keeping a close eye on the progress of these and other consultations and reporting changes relevant for our clients as they become apparent.
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