Spring Statement 2019 Revealed

Philip Hammond delivered the Spring Statement 2019 on Wednesday 13 March.

As expected, Brexit overshadowed the statement and there was no major tax or spending changes.

However, there were three key announcements that Hammond pledged to undertake immediately:

1. In a response to concerns raised by head teachers, the government will fund free sanitary products in secondary schools and colleges in England from the next school year
2. The chancellor pledged to clamp down on late payments. Company audit committees will now be required to report on their payment performance in their annual report and accounts
3. In response to knife crime, £100million will be made available to police forces in the worst affected areas in England and Wales

Hammond also made it clear that if a Brexit deal was agreed a three-year spending review would be launched before the Summer, which will conclude alongside the Budget. He also pledged a £26.6billion ‘deal dividend’ to boost the economy.

 

Other key announcements:

Economy

Hammond stated that the economy remains resilient and has continued to grow, with wages increasing and unemployment at historic lows.

• The OBR has forecast further economic growth every year, for the next five years
• Once Brexit uncertainty has been removed, business investment is forecast to start growing again from next year

 

Science and Technology

Hammond announced that he will be allocating over £200million to support scientists, innovators and industry:

• £79million funding for a new super computer in Edinburgh whose processing power will contribute to discoveries in medicine, climate science and aerospace
• £45million investment in Bioinformatics to support researchers using big data to drive genetic research
• £81million into Photonics to help researchers and industry better understand the composition of new materials and how they behave in different conditions.

 

For Business

Apprentices

The government continues its support of apprentices. At the Budget 2018, it was announced that the co-investment rate will be halved from 10% to 5% and the amount employers can transfer to their supply chains would increase to 25%. These changes will now take effect from April 2019.

Tax Avoidance, Evasion and Non-compliance

To continue to make the tax system fairer the government will launch several consultations:

• Preventing abuse of the R&D tax relief for small- or medium-sized enterprises (SMEs) –This consultation will focus on how the measure will be applied, to minimise any impact on genuine businesses
• Insurance Premium Tax operational review – A call for evidence on where improvements can be made to ensure that Insurance Premium Tax operates fairly and efficiently
• The Furman review found that tech giants are becoming increasingly dominant. The government will respond later in the year to how it can update competition rules to open the market and increase choice for consumers
• VAT Administration in the Isle of Man – HM Treasury’s findings and recommendations to ensure the right VAT continues to be paid and collected in the Isle of Man
• Structures and Buildings Allowance – Draft legislation, published for comment, on introducing a new, permanent allowance for investments in non-residential structures and buildings to create a more competitive tax regime for businesses – as announced at Budget 2018
• Social Investment Tax Relief (SITR) – A call for evidence on the use of the SITR scheme to date, including why it has been used less than anticipated and what impact it has had on access to finance for social enterprises

Digitalising the Tax System

• Making Tax Digital – From April 2019 Making Tax Digital will come into force, requiring Mandatory digital record keeping for VAT for businesses over the VAT threshold (with turnover over £85,000). The government has confirmed that penalties will be light for non-compliance in the first year.

Most importantly, the government will be focusing on supporting businesses in the transition and will NOT be mandating MTD for any new taxes or businesses in 2020.

Promoting Clean Business Growth

• The Government is calling for evidence on a business energy efficiency scheme to help smaller businesses reduce their energy bills and carbon emissions
• By 2025, the government will introduce a Future Homes standard to future proof new build homes with low carbon heating

UK Open for Business

As the UK leaves the EU, Hammond made it clear that it is vital for the UK to be open for business. He announced:

• Access to Finance: the government will provide additional funding to the British Business Bank for venture and growth capital as we leave the EU
• Support for exporters – a new General Export Facility will be launched to provide flexible short-term support for UK exporters. UK Export Finance will publish further details
• From June 2019, landing cards will be abolished and citizens of the US, Canada, New Zealand, Australia, Japan, Singapore and South Korea will be permitted to use e-gates at UK airports
• From Autumn 2019, research institutes and innovating businesses will benefit from an exemption for PhD-level occupations from the cap on high-skilled visas

 

For Individuals

National Living Wage

Later this year the government will set a new remit for the National Living Wage beyond 2020.

 

Housing

To restore the dream of home ownership as announced at the Budget 2017, Hammond announced the following to keep the government on track

• £717million from the £5.5billion Housing Infrastructure Fund to unlock up to 37,000 homes at sites including Old Oak Common in London, the Oxford-Cambridge Arc and Cheshire
• the government will guarantee up to £3 billion of borrowing by housing associations in England to support delivery of around 30,000 affordable homes
• Transforming cities fund - £60million of investment will be made in 10 cities across England to support bus station upgrades, new cycle lanes and road improvements.
• Borderlands growth deal - up to £260 million will be invested, which is on top of the £102million announced recently for Carlisle Southern Link Road
• Local Full Fibre Networks - £53million of funding will be available to nine local areas
• Planning for High Streets - a consultation will be launched to see how local areas can better support their local high streets

 

This covers the key information announced at the Spring Statement 2019. Further documentation can be found here.

Contact us if you have any questions on the announcements made or register for our newsletter to be kept up-to-date with the latest business news.