Little spring in Chancellor’s Statement

As Chancellor Philip Hammond completed his move to a single annual Budget, accountants and the London Mayor asked whether he was left with little to give away, and little to say, in his Spring Statement.

April 2018

As Chris Sanger, EY’s Head of Tax Policy, says: “Someone who’d missed the Chancellor’s protestations over the last few weeks would be forgiven for not realising that we’d moved from a Spring Budget to a Spring Statement. With the same level of jokes and updates on the economy, all that was lacking was the bulk of tax related measures that normally follows the first 20 minutes of the speech. Instead we saw the Chancellor lay bare his ideas for the November Budget: the taxation of digital companies, potential changes to the VAT threshold, taxation increases to discourage single use plastics, with the money raised ear-marked for incentivising innovation, with a £20m down payment to boot.

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George Bull, senior tax partner at RSM said that many had hoped that the Chancellor would use the opportunity to set out a tax road map for the UK after Brexit. “On the face of it, that is exactly what he did not do,” Bull says. “Instead, he announced the publication of 13 tax calls for evidence and consultation documents. The Chancellor also promised ‘support to hard-working families through lower taxes’ although he gave no details as to what those lower taxes might look like.”

However, Bull says that putting all the pieces together rather different picture emerges:

• If the income tax burden on low- and middle-income groups is to be reduced, the Spring Statement suggests that those tax reductions will be more than compensated for by changes to the tax base including the taxation of the digital economy and VAT changes.
• After years of concentrating on tax avoidance, new measures will be introduced to tackle the tax gap by clamping down on tax evasion through the cash economy, through internet sales and through the non-payment of VAT liabilities.
• A number of other measures will also be introduced to help investors and businesses in a targeted way.

The Mayor of London, Sadiq Khan cautiously welcomed an extra £1.67bn of investment in genuinely affordable homes in London but criticised the 18-month delay in agreeing London's share since some of the funding was first announced by the government, warning annual funding levels were still less than half of the levels the government inherited in 2010.

What did YOU think of the Chancellor’s Spring Statement? Let us know at londonaccountant@icaew.com

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