Chancellor Philip Hammond presented his inaugural Spring Statement on Tuesday 13 March 2018 and, as predicted in the media, it was short and snappy.  

In stark comparison to the ‘big red book’ Autumn Statements of the past, Spring Statement 2018 was simply an economic update, focusing on the OBR’s forecasts for the economy and public finances, with no new tax measures announced.

Declaring the first substantial fall in debt in 20 years, the Chancellor was upbeat, even ‘Tigger’ like in his delivery, proclaiming that the Government’s balanced approach to debt reduction and long term investment is solid progress towards making ‘Britain fit for the future with an economy that works for all’.

Here's a summary of the key points delivered in the Chancellor’s statement:

The OBR has increased its GDP growth forecasts over the next five years, somewhat modestly:

The OBR anticipates inflation to fall over the next year with the expectation that wages will grow faster than prices over the following five years.  This may provide for greater consumer confidence which in turn will help to stimulate more economic activity.

UK debt is projected to fall after next year from 86.5% (as a percentage of UK GDP) to 77.9% in 2022/23. This is the 'light at the end of the tunnel' that the Chancellor was referencing in the Spring Statement, which may provide greater room for more Government spending later in this Parliament.

As previously announced, the National Minimum Wage will increase from £7.50 to £7.83 from April 2018 for employees aged 25 and over.

There will be further assistance to help with the building of new homes in the UK up to a Government target of 300,000 per year.

On the tax front, a number of new consultations were introduced covering a wide variety of subjects including:

• Reducing single-use plastic waste through the tax system (i.e. tax charges)
• Adapting the tax system to ensure multinational digital businesses pay their fair share of tax in the UK
• Enabling entrepreneurs’ relief to be available for shareholders who are diluted below the 5% qualifying shareholding as a consequence of the company issuing further shares to raise capital for trading purposes
• Examining ways of encouraging more investment in “knowledge-intensive” businesses, including establishing an EIS fund structure to improve the supply of capital to such businesses
• Examining whether the VAT registration limit acts as a disincentive for small business owners wanting to grow their businesses

All of these consultations invite comment and the team here at Johnston Carmichael will consider the questions raised and make any appropriate representations where we feel our voice, and those of our clients, should be heard.