The chancellor Philip Hammond was faced with the unenviable task of delivering his Spring Statement in the midst of the political maelstrom of Brexit. Although Mr Hammond insisted that the economy was ‘remarkably robust’, he warned that a potential no-deal scenario would put public finances at risk and could cause significant disruption to the UK economy.
Despite an understandable reluctance to make significant changes, the chancellor did make a number of announcements. There is to be a £26.6 billion post-Brexit ‘deal dividend’ to help boost the economy. There will also be a full spending review that will conclude at time of the 2019 Autumn Budget.
The chancellor’s statement also confirmed that the government will apply a ‘light touch’ approach to penalties under its new Making Tax Digital regime; and promised to take action on late payments, including requiring company audit committees to review payment practices and report on them in their annual accounts. The government has pledged to invest in the UK’s physical and digital infrastructure, as well as technology, housing and the environment. The £700m reforms for business apprenticeships previously announced in the 2018 Autumn Budget will also be brought forward.
National Living Wage
The National Living Wage has increased by up to 5.4%.
|April 2018||April 2019 (current rate)|
|25 and over||£7.83||£8.21|
|21 to 24||£7.38||£7.70|
|18 to 20||£5.90||£6.15|
Contributions increase to a total of 8%, 5% from the employee and 3% from the employer.
The UK personal allowance, tax rates and bands for 2019/20 were announced by the Chancellor in the 2018 Autumn Budget. The income tax rates and bands applying from 6 April 2019 in England and Northern Ireland are outlined below:
|Band (£)||Rate %|
|1 – 12,500||Nil|
|12,500 – 37,500||20|
|37,501 – 150,000||40|
|Starting rate for savings||Nil|
|Starting rate limit for savings||£5,000|
Savings income allowance Not available if the taxable nonsavings income exceeds the starting rate band. £1,000 of savings income for basic rate taxpayers (£500 for higher rate) may be tax-free.
|Dividend Oridinary Rate||7.5%|
|Dividend Upper Rate||32.5%|
|Dividend Additional Rate||38.1%|
The first £2,000 of dividends are tax-free.
Other measures in brief
Increase in compulsory employer pension contributions
Employers will be required to contribute at least 3% on the qualifying pensionable earnings for eligible jobholders.
There was a 2% increase in the percentage applied by each CO2 emissions band in 2018/19. For 2019/20 the rates will increase by a further 3%.
Co-investment rate will be halved from 10% to 5%, and the amount employers can transfer to their supply chains would increase to 25% from April 2019.
National Living Wage
There will be a review of the latest international evidence on the impact of minimum wages that will inform future National Living Wage policy after 2020.
Anti-avoidance: R&D tax relief
The government will publish a consultation on the prevention of abuse of the R&D tax relief for SMEs.
Insurance Premium Tax (IPT)
There will be a call for evidence on where improvements can be made to ensure that IPT operates fairly and efficiently.
Off-payroll working in the private sector
A consultation paper has been published on the extension of the changes to the off-payroll rules (commonly known as IR35). The rules now include the private sector and the consultation aims to clarify the law for businesses and workers.
Following on from the recommendations of the Office of Tax Simplification, the government will publish a call for evidence on the simplification and improvement of the VAT Partial Exemption regime and the Capital Goods Scheme.