Chancellor delivers Spring Statement amid ‘cloud of uncertainty’.
Chancellor Philip Hammond’s second Spring Statement was delivered against a backdrop of political turmoil. It followed the voting down of Prime Minister Theresa May’s Brexit withdrawal deal.
Despite describing the economy as ‘remarkably robust’, the Chancellor offered a clear warning on the potential impact of a no-deal scenario. He said it would put progress on the public finances ‘at risk’ and cause ‘significant disruption’ to the UK economy. The Chancellor also confirmed that a full Spending Review will conclude alongside the 2019 Autumn Budget.
Key changes for 2019/20
Although the Spring Statement is not intended to be a major fiscal event like the Budget, the Chancellor did announce some new measures:
- Apprenticeship Levy: from April 2019 the co-investment rate will be halved from 10% to 5%. The amount employers can transfer to their supply chains will increase to 25%.
- National Living Wage: The government has appointed Professor Arindrajit Dube to undertake a review of the latest international evidence on the impact of minimum wages, to inform future National Living Wage policy after 2020.
A number of other key changes are coming into effect during 2019. These may have an impact on your business and personal finances:
- Employer-provided cars: for 2019/20, tax rates for each CO2 emission band will increase by a further 3%.
- Increase in compulsory employer pension contributions: from 6 April 2019 employers will contribute at least 3% on the qualifying pensionable earnings for eligible jobholders.
- Rising Residence Nil-Rate Band: The inheritance tax Residence Nil-Rate Band will rise to £150,000 for the 2019/20 tax year.
- Gift Aid – donor benefits simplified: The benefit threshold for the first £100 of the donation remains at 25% of that amount. For gifts exceeding £100, charities can offer benefits up to the sum of £25 and 5% of the amount of the donation that exceeds £100.
- Gift Aid Small Donations Scheme: The limit increases from £20 to £30 from 6 April 2019.
Making Tax Digital
The new Making Tax Digital rules take effect from 1 April 2019 where a taxpayer has a ‘prescribed accounting period’ which begins on that date, or otherwise from the first day of a taxpayer’s first prescribed accounting period beginning after 1 April 2019. For some VAT-registered businesses with more complex requirements, the rules will not take effect until 1 October 2019.
In the Spring Statement, the Chancellor confirmed that the focus will be on supporting businesses to transition. The government will therefore not be mandating MTD for any new taxes or businesses in 2020.
Changes to Entrepreneurs’ Relief
The minimum period throughout which certain conditions must be met to qualify for Entrepreneurs’ Relief (ER) is being increased from one year to two years.
Find out more
If you have any queries about any of the above changes and how it may impact you or your business, please contact the Starbox team.