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Spring statement round-up

For the second year running, the Spring Statement has been as low-key as expected, with only a few substantial announcements.

Delivering the speech on 13 March 2019, Chancellor Philip Hammond focused heavily on the forecasts for the UK economy provided by the Office for Budget Responsibility – and on the risk that these may change if the UK does not make an ‘orderly’ exit from the EU.

He did provide a few updates on existing policies, though, and a set of papers were published on the day that will form a starting point for future changes.

Here are some of the key points announced.

National minimum and living wage rates

The Chancellor announced a review into the economic and productivity impacts of minimum wage rates.

This will be carried out before a new remit is set for the Low Pay Commission to recommend rates beyond 2020.

Minimum wage rates are set to rise as expected from 1 April 2019, from £7.83 to £8.21 an hour for most workers aged 25 and above.

Date announced for apprenticeship reforms

A set of changes to apprenticeships were announced in the Budget last year, following repeated calls from business groups to reform the system.

These include reducing the co-investment rate for small businesses from 10% to 5% of training costs, and allowing larger businesses to invest up to 25% of their levy to support apprentices in their supply chain.

It has now been confirmed that these changes will take effect from 1 April 2019.

Further legislation for the structures and buildings allowance

The Government published new draft legislation on the new capital allowance relief for non-residential structures and buildings, which was announced in Budget 2018.

It has invited responses before the legislation is put to the House of Commons.

The allowance would be set a flat rate of 2% per annum over a 50-year period, and would apply to eligible costs incurred on or after 29 October 2018.

Soft landing period for Making Tax Digital

Making Tax Digital (MTD) for VAT is still set to come into effect from 1 April 2019, with a confirmed ‘light-touch’ approach to penalties.

The Government also said it would not be extending MTD any further in 2020, to allow more time for businesses to transition to the new scheme.

Measures to prevent tax evasion and avoidance

HMRC published a new policy paper on its approach to tackling tax avoidance, evasion and other forms of non-compliance.

It also announced future consultations and reports on specific areas including R&D tax relief, insurance premium tax and the VAT administration in the Isle of Man.

Contact us

While there were few major announcements in this year’s Spring Statement, there are other tax changes in the 2019/20 tax year and beyond to be aware of.

Contact tracya@knightandcompany.co.uk or call 01628 631056 to talk about the changes that apply to you.