The Chancellor rose in a parliament preoccupied with the ongoing Brexit drama to deliver a Spring Statement on the state of the economy.
Mr Hammond made clear some while ago that he wanted his Spring Statement to be a short financial briefing and he stuck to a no-frills script.
There were no new tax measures and only minor spending changes. The Office for Budget Responsibility (OBR) trimmed its projections for government borrowing, but Mr Hammond kept his powder dry for the forthcoming Spending Review
While the Chancellor may have appeared to say little, his statement was followed by some announcements and the publication of a range of documents covering areas including:
- Making Tax Digital (MTD) – the government confirmed a light touch approach to penalties in the first year of MTD’s implementation. MTD will not be extended to any new taxes or businesses in 2020.
- Apprenticeship levy – the timing of the reduction in the co-investment rate for employers from 10% to 5%, and the increase to 25% in the amount that employers can transfer to their supply chains, will be brought forward. These changes will take effect from April 2019.
- Draft legislation for the new structures and building allowance for investments in non-residential structures and buildings announced in the 2018 Budget. The relief will be given as an annual 2% flat rate over 50 years for new commercial structures and buildings.
- Review of time limits for the recovery of lost tax involving an offshore matter, comparing them with other time limits. It will set out the rationale for the charge on disguised remuneration loans and will be laid by 30 March 2019.
- CGT private residence relief changes announced in the 2018 Budget to lettings relief and the final period exemption.
These documents are likely to result in legislation following the Autumn Budget.
Key changes for the forthcoming 2019/20 tax year include:
- The personal allowance will be raised to £12,500 from April 2019, one year earlier than previously planned. At the same time, the higher rate threshold will rise to £50,000, also a year ahead of schedule.
- Scottish tax bands have been revised, but the higher rate tax threshold remains unchanged at £43,430 – much lower than in the rest of the UK.
- The Junior ISA limit will rise to £4,368, although other ISA limits are unchanged.
- The pension lifetime allowance will rise to £1.055 million, with no changes to the annual allowances.
- The VAT registration threshold has been frozen for a further two years, meaning it will be £85,000 until April 2022.
- Entrepreneurs’ relief has been kept, but the minimum qualifying period has been extended to 24 months, to encourage longer-term investments.
To download our PDF of the Spring Statement, please click here.