14th March 2019
By Joanne Colwell, Partner
With attentions arguably diverted elsewhere, this year’s Spring Statement was, as promised, a fiscal non-event. And light on the detail. But there were a few things for British businesses to consider as Brexit looms.
Obviously, the Chancellor couldn’t avoid Brexit in the Spring Statement. Hammond continued to promise an alleviation of austerity. With more cash for public services and tax cuts – but only if a no deal situation was avoided. He warned “the progress that we have made will be at risk if we can’t secure a smooth and orderly exit”. He also promised a £26.6 billion ‘deal dividend’ would be made available to help boost the economy if a deal could be reached.
Hammond labelled the UK’s economy “remarkably robust”. Yet economic growth has slowed to a post financial crisis low. The uncertainty of Brexit has hampered long-term investment and planning for UK’s businesses. The Office for Budget Responsibility has cut the growth forecast to 1.2% which is down from October’s 1.6% prediction. However, public finances are apparently in good shape. A lower than expected deficit in the current fiscal year at around 1.1% will allow for some extra spending to be announced in the Budget later this year.
The Chancellor confirmed that the government is set to launch a review into the future of the National Living Wage and National Minimum Wage after 2020. With Professor Arin Dube, an American economist and researcher into minimum wage, at the helm. Dube’s work will inform future policy and help facilitate “sustainable pay rises for millions of British workers”. The review is assured to consider the views of employers, trade unions, the Low Pay Commission and other stakeholders.
As HMRC phase in its Making Tax Digital regime from 1st April, Hammond confirmed that the government will apply a ‘light touch’ approach to any penalties. He also promised to take action on late payments. This includes requiring company Audit Committees to review payment practices and report on them in their Annual Accounts.
Other measures announced include:
If you would like a more detailed chat about any of the issues raised in the spring statement and how they may affect you, please feel free to get in touch. We’d also love to hear your thoughts and opinions!