Chancellor Philip Hammond resisted any temptation to make significant tax changes for the sake of it when delivering his first Spring Statement on 13 March 2018.
There were no juicy rumours in the lead-up to the event, no red briefcase and no photoshoot outside 11 Downing Street as ‘Spreadsheet Phil’ followed through with his plan to move towards a solitary major fiscal announcement every year in the form of an Autumn Budget.
What was in Spring Statement 2018?
We had the usual set of forecasts from the Office for Budget Responsibility (OBR), which revised its overly gloomy prediction at Autumn Budget 2017.
The OBR slightly upgraded its November 2017 forecast for growth of 1.4% in 2018 to 1.5%, although GDP is expected to fall back to 1.3% in 2019 and 2020.
Hammond said borrowing fell to £45.2 billion in 2017/18, which is £4.7 billion lower than the OBR’s forecast in November 2017.
The chancellor also announced the government will bring forward the next property revaluation for business rates from 2022 to 2021.
Why was there no mini Budget?
The chancellor announced in Autumn Statement 2016 that Spring Budget 2017 would be the last.
“No other major economy makes hundreds of tax changes twice a year, and neither should we”, Hammond said during his speech at the time .
The feeling was the Treasury started tinkering with tax rates and spending commitments almost straight after the chancellor delivered the previous financial statement – and that had to change.
So the decision was made to swap the Budget, usually held in March, with the Autumn Statement in an attempt to have more time to scrutinise future policies in an Autumn Budget.
What can we expect to be in Autumn Budget 2018?
With Brexit inching ever closer to becoming a reality, it’s hard not to assume the next Budget will contain some major tax changes when delivered sometime in November.
A few hints of what’s to come in 2019/20 were contained in Spring Statement 2018 in the form of consultations, which will be perused before potentially becoming legislation in the autumn.
Among them, the rules surrounding entrepreneurs’ relief may be tweaked to benefit those selling shares in their business.
Entrepreneurs pay reduced capital gains at 10% when they dispose of shares in their business, although they lose this if their equity falls below 5%. It’s possible this catch may be removed.
There’s also the prospect of Hammond tinkering with the VAT registration threshold (£85,000 in 2018/19) amid fears it acts as a disincentive for small business owners who want to expand.