Chancellor Philip Hammond once again demonstrated his commitment to a ‘low key’ Spring Statement with his recent update for the UK. Obviously, there was a lot of conversation around Brexit and the ‘Deal/No Deal/other option’ outlook for the UK.
Also on the agenda was the imminent Making Tax Digital (MTD). MTD comes into play for VAT registered business from April and you can find out more about it right here.
Here’s an overview of the news and how it affects your business. To get more in depth information please head over to our Spring Statement 2019 PDF here.
Tax avoidance, evasion and non-compliance
Since 2010, more than 100 measures have been put in place to reduce tax avoidance and evasion and the Government confirmed their commitment to further this with their Big Tech update with action for the tech giants.
As promised in the Budget 2018, the apprenticeship levy co-investment rate will be halved from 10% to 5%, and the amount employers can transfer to their supply chains will increase to 25% from April 2019.
Making Tax Digital
Big news in the accounting world and for any business VAT registered, MTD got a mention and the hint of a gentle transition as the Government confirmed it will take a ‘light touch’ approach to penalties in the first year.
Review of the aggregates levy
The aggregates levy has remained frozen at £2 per tonne since 2009 so a discussion paper has been published to look at a review and update going forward.
Structures and Buildings Allowance
The Structures and Buildings Allowance (SBA) is set at the flat rate of 2% per annum (over a 50-year period). This applies to eligible costs incurred on or after 29 October 2018.
Other key points of the Chancellor’s relief include:
- Costs for new conversions or renovations.
- Availability for overseas structures and buildings, where the business is within the charge to UK tax.
- Continuing relief even for periods of disuse.
- Sale of the asset will not result in a balancing adjustment; instead the remaining allowances are transferred to the purchaser.
- Where leases exceed 35 years and at least 75% of the interest in property is retained and 75% or more of the capital sum has been paid, the allowance is transferred to the lessee.
Minimum and living wage
The commitment to work to reducing the pay gap and work on low pay in the UK was further added to in the Spring Statement.
The Government confirmed a remit for The Low Pay Commission (LPC) to go beyond 2020 as it wants to continue to engage with employers and trade unions for more research to get a better picture and gain more focus on the issue.
The LPC’s remit post-2020 will be confirmed by Budget 2019.
“Our underlying borrowing forecast has been revised down thanks to higher tax receipts and lower debt inter est. The Chancellor’s net giveaway offsets a little of that improvement.” “Since October our borrowing forecast is down by £2.7bn in 2018/19, and by £6.3bn by 2023/24.”
- Office for Budget Responsibility
New Government regulations, papers and guides
The government announced that they will be publishing some new regulations, papers, and guides to help businesses understand changes and updates coming up in 2019 and beyond.
The most relevant ones will be:
- National Insurance Contributions (NICs) employment allowance draft regulations.
- Child Trust Funds (CTF).
- VAT partial exemption and capital goods scheme simplification.
- Social investment tax relief (SITR).
- Enterprise investment scheme approved funds guidelines.
- Capital gains tax private residence relief.
The Government also promised to publish a list of summaries for the following documents:
- Protecting your taxes in insolvency.
- Corporate capital loss restriction.
- Stamp taxes on shares consideration rules.
- Digital services tax.
Quite obviously, Brexit featured highly in the Spring Update as the pending leave, deal, no deal conversation continues to dominate the headlines.
These key topics were discussed and raised as matters of concern as the UK moves into an unknown and uncertain future:
- Changing trade rules
- Relaxed rules for importers
- Manage your supply chain
- Currency fluctuations
- Know your target market
They spoke about exporting, importing, and also released some interesting online news about the UK businesses and their approach to digital.
Changing trade rules
If we do leave the EU without a deal, the expectation from the government is that UK trade will revert to World Trade Organisation (WTO) rules immediately.
Relaxed rules for importers
Initially, much like with MTD, in the event of no-deal Brexit, the government will take a relaxed approach to businesses importing goods but can’t guarantee for those exporting to the EU.
Manage your supply chain
Businesses that rely on EU imports have been advised to ‘plan ahead’ especially if they operate with a time-sensitive supply chain.
Three in five UK businesses are already reporting that they’re seeing changes in costs from countries in the EU as the currency and markets fluctuate due to the uncertainty.
Know your target market
One interesting update from the Spring Statement was that the UK is home to the third largest e-commerce market, playing home to giants like Amazon. Ironically, they also told us that some 54% of UK businesses have no website and that the potential they’re missing out on in the digital age needs to be addressed.
More information from the Spring Statement…
For more in-depth and detailed information from the ‘low key’ update pre-Brexit, head over to our Spring Statement below.
If you’d like to discuss anything from above to understand how it affects your business or your accounts then please do contact us today.