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Spring Statement set for 13 March 2019
29th January 2019
The Chancellor of the Exchequer, Philip Hammond, will deliver his Spring Statement on Wednesday 13 March 2019, just 16 days before Brexit on 29 March 2019.
It will also be just 18 days before the start of Making Tax Digital for VAT purposes.
In recent years the main Budget has moved to the autumn, rather than the Spring, so Mr Hammond may not be planning to announce any changes to tax and spending - but with Brexit just days later there may be some surprises from the Chancellor.
The last main Budget was held on 29 October 2018.
If the UK leaves the EU without a deal in place, the Chancellor will need to hold an emergency Budget in April to boost spending and retain confidence in the economy.
Finance Bill
The current finance bill, first published on 7 November 2018, is still making its way through Parliament and is expected to become law in February 2019.
Is austerity over?
Last year the Prime Minister famously declared that austerity was over, but we didn't see much evidence of that in the Budget, apart from an extra £20bn promised for the NHS.
The Financial Times has reported that the planned cut in corporation tax from 19% to 17% in April 2020 will cost the exchequer some £12bn by 2022, according to estimates from HM Revenue & Customs. The Chancellor may instead choose to keep this back for Brexit contingencies and departmental spending.
Starting in April 2019 there is an expected Spending Review for government departments and the Chancellor may have something to say about that.
Business rates reform?
He may also raise the prospect of the long-overdue reform of the business rates system, particularly as the Treasury Select Committee have launched a review of whether it should be scrapped in favour of a different system of taxation.
IR35 roll out consultation
Another issue is the expected consultation on off-payroll working. From April 2020, medium and large private sector organisations will be responsible for assessing the employment status of any contractor who provides their services through a Personal Service Company or intermediary. If the contractor is deemed to be inside IR35, PAYE and employees’ and employers’ NICs will have to be deducted at source by the relevant fee payer.
As this is an extension of the IR35 rules, the obligations to correctly operate PAYE and account for NICs will fall on the engaging company in most circumstances. The rules will apply to all engagements that are in place on or after 6 April 2020 in medium and large organisations. Small companies will be exempt, and the forthcoming consultation should set out the detailed proposals and exemptions.
Brexit uncertainty
It is by no means clear that the current Brexit uncertainty will be resolved by the date of the Spring Statement, so Philip Hammond may wish to retain a very tight lid on public finances until Brexit is clear.
Bishop Fleming will be covering the Spring Statement and will analyse its contents and its effects on taxpayers.
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