Swindon accountants evaluates the Spring Statement and what it really means

Dominic Bourquin, Partner, MHA Monahans comments on the Spring Statement that was released by Chancellor Philip Hammond yesterday.

If anyone was hoping that Philip Hammond’s Spring Statement would provide a welcome distraction from Brexit, they will have been sorely disappointed.  The seemingly never-ending deal-or-no-deal Brexit debate, and the uncertainty it brings with it, became the star of the Spring Statement show.  

Hammond offered the promised Brexit “deal dividend” in one box and no-deal economic disaster in the other.  If there was anyone left in any doubt as to which Brexit box Hammond would prefer MPs to open, there won’t be now.

With the focus firmly on whether politicians can finally agree a deal before the UK leaves the EU, Mr Hammond has clearly decided that now is not the time to rock the boat with any major changes to the UK taxation system. In fairness to him, Hammond has always said that big tax reforms would not be a feature of his Spring Statements but it was still a bit of a surprise to find that he’s almost avoided them altogether. 

Instead, he has made do with re-affirming changes that had already been previously announced such as the increase in personal allowance in April 2019.

There was, however, a glimmer of reassurance for companies concerned about the introduction of the government’s Making Tax Digital plans.  Not only has Hammond confirmed that there will be a ‘light touch’ approach to penalties in the first year of implementation but has also confirmed that Making Tax Digital won’t be mandated for taxes until after 2020.  That’s particularly good news for small businesses who have been trying to get to grips with their new obligations.

Another piece of good news came in the form of the apprenticeship levy reduction from 10% to 5% - Hammond is introducing the previously announced reforms from April 2019, a year earlier than expected. This will no doubt be a welcome boost to apprenticeship support for SMEs.

There were a few indications in the statement that changes could be afoot and that we should look out for consultations due to be published in the coming months.

There are mentions about the publication of papers looking at tax avoidance and offshore tax compliance strategy, so evasion and tax compliance have clearly been on Hammond’s mind.  Don’t be surprised to find a focus on tightening up the rules in the autumn budget.

A further announcement which will be key for employers to keep an eye on is the government’s review of the minimum wage policy in the UK and the remit that will be set by the Low Pay Commission for 2020 and beyond.  We should see the results of this review later in the year.

Despite revising the projected economic growth downwards for the time being, Hammond is still promising us a bright future and this seems to be the most important thing to take away from his statement this year. I suspect we may see a few more changes in the autumn, when the way forward for Brexit will hopefully be a little clearer

For more information on MHA Monahans, visit www.monahans.co.uk.