In a Nutshell: The Chancellor's Spring Statement.
After the recent move to one Budget per year, yesterday saw the Chancellor of the Exchequer Philip Hammond deliver his Spring Statement. Very much an update rather than a mini budget there were no tax rises, or cuts, no increases in duties or VAT, no increases or cuts in spending – in fact no policy announcements at all.
As we are sticking to the main budget proposals of November 2017, the good news is that from next month individuals will not pay any Income Tax unless their income exceeds £11,850 and will not become higher rate payers until their annual income exceeds £46,350.
Adopting a vaguely reassuring position the Chancellor indicated that wages will start to rise, but not yet. Earnings are currently rising below the rate of inflation which stands at 3%, meaning that in real terms there has been a cut in earnings as prices in the shops have been rising due to the weak pound.
One area which will please many high street retailers is the Chancellor’s announcement that there’ll be a crackdown on VAT dodging online businesses who, by pretending to be individuals, are able to avoid charging VAT and therefore gain a competitive advantage. How he will deal with the problem isn’t clear but it does mean that many items bought online, and previously VAT-free, will go up in price. He also touched upon the general move to a cashless society, which could mean the end of smaller value coins such as the 1p, 2p and perhaps even 5p. This would have a significant impact on the way people shop and do business.
Finally, Mr Hammond did hint that there would be a slight loosening of the purse strings in the Autumn with more money to spend on things like the NHS and education, and perhaps some tax cuts. However, with the UK showing only marginal growth we would not suggest that this is a time for counting chickens!
Author: Paul Wilkinson FCA
A former pupil at Lancaster Grammar School, Paul moved away from the area and completed his training with KPMG in Birmingham, qualifying as a Chartered Accountant in 1989. He returned to Lancaster and joined Scott &...
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