Spring Statement 2018
13 March 2018
13 March 2018
Chancellor Phillip Hammond promised MPs that today’s Spring Statement would be short and snappy, and he lived up to his word with his speech lasting just 26 minutes. The Treasury subsequently published 11 consultations/calls for evidence.
This was the first Spring Statement under the new fiscal regime where we have just one annual budget rather than the former arrangement with a spring budget and a further supplement of tax and spending measures included in the autumn budget. As such, it was good to see that the content of this statement did not merge into being just a ‘mini budget’. Whilst the more significant issues will now be announced in the autumn budget speech, to allow time for new legislation in the following April, this statement did include the Office for Budget Responsibility’s (“OBR”) economic forecasts and the announcement of various consultations and calls for evidence.
Consultations / Calls for Evidence
The Chancellor announced the following consultations;
VAT
It was announced at Autumn Budget 2017 that the VAT thresholds will be maintained at their current levels for 2 years from 1 April 2018, and a Policy Paper on the subject was published on 22 November 2017.
This 2-year period was introduced to allow time to consult on the potential to adapt the VAT thresholds system to avoid the ‘cliff-edge effect’ where a supplier has to charge VAT on taxable supplies reaching the threshold. Government is aware that this acts as a disincentive for business growth and also puts some suppliers at a competitive disadvantage when their taxable supplies only just breach the threshold.
In addition to the consultation, Government has also published a link to a questionnaire for small businesses providing a quicker way (7 minutes to complete) to engage with the call for evidence. This consultation concludes on 5 June 2018.
Extension of security deposit legislation
The Chancellor announced at Budget 2017 that Government would introduce legislation in Finance Bill 2018 to 2019 which would extend the current scope of security deposit legislation to include Corporation Tax and Construction Industry Scheme deductions. This will take effect from April 2019.
A consultation, “Extension of security deposit legislation”, seeks views on how best to introduce this change to ensure that it is implemented in the most effective way and that the legislation is targeted. The consultation closes on 8 June 2018.
Entrepreneurs’ Relief
Currently, if an entrepreneur’s company issues new shares which result in their personal stake falling below 5% then they could lose their entitlement to the special Capital Gains Tax rate of 10%. At Budget 2017, the Chancellor announced a proposal whereby an individual in this position could be treated as if they had disposed of their shares and re-acquired them at their market value just before the time the company issued the new shares. The entrepreneur may claim Entrepreneurs’ Relief on that gain either at the time of election, or on a future disposal of shares.
A consultation has been published, “Allowing Entrepreneurs’ Relief on gains made before dilution”, seeking views on changes to Entrepreneurs’ Relief to ensure that it doesn’t discourage entrepreneurs from seeking external finance for their companies. The consultation closes on 15 May 2018.
Taxation of self-funded work-related training
The Autumn Budget 2017 announced that Government would consult on how it could extend the existing tax relief available on self-funded work-related training by employees and the self-employed.
Following the Spring Statement, a consultation, “Taxation of self-funded work-related training”, has been announced which aims to give the government better understanding of how it can learn from previous initiatives, such as vocational training tax relief in the 1990s, and how it could design an extension to the existing tax relief that focuses on supporting good quality training for those wanting to upskill or train (particularly those who want or need to change career). The consultation closes on 8 June 2018.
Cash and digital payments in the new economy
A call for evidence, “Cash and digital payments in the new economy”, has been published containing 23 questions which aim to gain a better understanding of the role of cash and digital payments in the new economy - keeping to Government’s theme of ensuring that the economy is fit for the future and remaining up to date with how people pay for goods and services. The Call for Evidence closes on 5 June 2018.
Online platforms’ role in ensuring tax compliance by their users
A consultation, “Online platforms’ role in ensuring tax compliance by their users” has been published which aims to explore how massive online platforms could aid HM Revenue and Customs (“HMRC”) and taxpayers to help people who make money through the platforms understand and meet their tax obligations. The consultation concludes on 8 June 2018.
Aspire Comment
Aspire will be providing further detail on certain consultations. Keep your eyes peeled on the website for further updates.