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spring statement

Spring Statement 2018: Scene-setter Spring Statement ‘light on detail’

Tony Medcalf, tax partner at MHA Chiks, said: “We were told not to expect any fireworks in this statement and the chancellor was true to his word.

 

“He made reference to quite a few issues that would be of interest to the business community, such as more money to help small firms engage apprentices and taking action to tackle late payments, but didn’t give further details.

 

“He also said he wanted to unleash inventors and discoverers, but again there was no mention of how this would be done. This was a scene-setter speech that touched on the government’s aspirations, rather than setting out specific policies.

 

“On the whole, I think business owners will be relieved that there are no new major initiatives to have to try and get their head around.”

 

An economy taking a turn for the better

 

The Office for Budget Responsibility (OBR) forecasts the economy will continue to grow, the deficit will fall and that debt will decline. 

 

Philip Hammond’s statement today was upbeat in message and tone; in fact he chose to compare himself to Tigger, in his belief that Britain is bouncing back under the guidance of the current Government.

 

The Chancellor informed parliament that more jobs will be created, inflation will drop and wages will rise in real terms.

 

  • The National Living Wage will rise to £7.83 and National Minimum Wage will rise for under 25s and apprentices
  • Business rates revaluation will be brought forward to 2021 and take place every 3 years
  • The first wave of funding for the £190m Challenge Fund to help roll out full-fibre broadband to local areas has now been allocated
  • The government is working with 44 areas on their bids into the £4.1bn Housing Infrastructure Fund
  • The Housing Growth Partnership, which provides financial support for small house builders, will be more than doubled to £220m

 

Spending review

 

A spending review in 2019 will look at, in the Chancellor’s words ‘what the country can afford and decide on spending priorities’ for the future.

 

This will include, amongst other matters, a review of tax on red diesel, tackling plastic pollution and a new process for VAT collection.   The Chancellor gave no further information regarding how VAT could be dealt with in future, however this could have major implications and we await further details.

 

Philip Hammond believes, in his words, that there is ‘light at the end of the tunnel’ and that the country is well on its way to rebuilding the public finances.  He says money will be spent on schools, hospitals, social care, education and infrastructure and not wasted on debt interest.

 

If you would like to discuss this in more detail, or you would like to speak with a member of our team, please email Tony Medcalf or call 01772 821021

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spring statement

Q&A – What is the Spring Statement and what can we expect?

MHA Chiks tax partner Tony Medcalf explains why we have a Spring Statement this year instead of a Budget and what we can expect.

 

Why is there no Spring Budget this year?

 

In recent years there have been two large fiscal events, the Budget in March and an Autumn Statement, usually in late November or early December, which effectively served as a ‘mini-budget’.

 

After Philip Hammond became chancellor, he used his Autumn Statement in 2016 to announce he was moving the Budget to the autumn instead and would instead give a low-key Spring statement in its place.

 

“No other major economy makes hundreds of tax changes twice a year and neither should we,” he told a surprised House. Hence the Spring Budget of March 2017 was the final one and we had our first Autumn Budget in November 2017.

 

What can we expect from the Spring Statement then?

 

Recent media reports suggest that the Spring statement will act merely as an update on the UK’s economic growth prospects for the years ahead, with government setting out its response to the official forecasts from the Office for Budget Responsibility (OBR).

 

In a series of briefings with the media, Treasury spokespeople have said there will be “no red box, no official document, no spending increases, no tax changes”. It is expected to last 15-20 minutes, rather than the usual one hour plus.

 

So, will there be any policy or fiscal changes at all?

 

Not likely. There’s some talk of the statement being used by the chancellor to “pitch ideas and launch consultations”, perhaps with a view to such changes being cemented during the actual budget later in the year, but the chances of any tax or spending announcements look remote.

 

How else will be the Spring Statement be different?

 

It’s taking place on a Tuesday, which is another big departure from the norm. It has traditionally followed the high-profile Prime Minister’s Questions slot on a Wednesday lunchtime.

 

There won’t be the usual photo-shoot in Downing Street where the chancellor holds aloft the red box before being driven to The Commons. It all looks like a concerted attempt from the Treasury to play the event down.

 

Is this a good thing or a bad thing?

 

I would imagine most businesses would welcome this as a good thing. At a time of high uncertainty because of the ongoing Brexit negotiations, it allows for expectations to be managed and the markets not to be spooked by any sudden changes.

 

The chancellor will give his Spring Statement on March 13.

 

If you would like to discuss this in more detail, or you would like to speak with a member of our team, please email Tony Medcalf or call 01772 821021

spring statement

Light-touch Spring Statement is good for business

MHA Chiks tax partner Tony Medcalf explains why this year’s low-key Spring statement will be welcomed by the business community.

 

When chancellor Philip Hammond gives his Spring statement next week, there will be no red boxes, no posing for the cameras in Downing Street, and no big tax and spending announcements.

 

What used to be our regular mid-March fixture is widely expected to be replaced by a speech just 15-minutes long.

 

It follows the chancellor’s decision last year to move the main Budget to the autumn and replace what was the Autumn Statement with a light-touch Spring Statement, consisting mainly of a brief response to the OBR’s current economic forecasts.

 

So, while financial journalists and commentators may be at a loose end next Tuesday afternoon, the slimmed-down event should be welcomed by business owners.

 

It made little sense having two major fiscal events in the same year. Just as businesses are getting their heads around one set of tax changes, along comes another just a few months later.

 

Businesses are already dealing with enough uncertainty with Brexit and a long list of other financial and legal requirements. These include workplace pension changes, the Making Tax Digital regime, and changing data protection laws to name just a few.

 

We know this year’s Spring Statement will be different because the Treasury has been seeking to play down its significance since late last year in a series of behind-the-scenes media briefings.

 

Aside from the government’s response to the OBR figures, the chancellor may use the statement to launch some consultations, sowing the seeds that could result in actual fiscal changes in the Budget later this year.

 

But the clear and consistent message coming out of Number 11 is to “expect very little”. I would imagine most business owners will happily settle for that.

 

If you would like to discuss this in more detail, or you would like to speak with a member of our team, please email Tony Medcalf or call 01772 821021