Spring Statement 2019

Philip Hammond delivered his Spring Statement on 13 March, amidst substantial economic uncertainty.  The Office for Budget Responsibility’s forecast is that the UK economy will grow at the lowest rate since 2009, although the Chancellor has promised a £26.6bn war chest of spending to alleviate some of the impact of the UK leaving the European Union provided that it does so with a deal. 

The Spring Statement is not about tax changes, which are part of the annual Budget held in the Autumn, so there are few announcements with tax consequences.  We summarise the main points of relevance below. 

Making Tax Digital 

Making Tax Digital is the name given to a programme of requirements for businesses to both maintain accounting records and make relevant filings digitally to HMRC, with the data submitted linked to the underlying records.  It begins to come into force for VAT registered businesses from this April, with some classes of business deferred until October.  Businesses that are voluntarily VAT registered are not required to comply. 

It had been the intention that Making Tax Digital would be extended to non-corporate businesses in respect of Income Tax from April 2020, but it was announced that there would now be no extension of the scope of Making Tax Digital in 2020.  This will allow HMRC to focus on supporting those businesses making the transition in the next few months. 

VAT simplification 

The Office of Tax Simplification has recommended simplification of VAT Partial Exemption and the Capital Goods Scheme.  These are mechanisms that seek to ensure that businesses making both taxable and exempt supplies recover an appropriate proportion of the VAT they pay on related costs, in particular buildings.  The government will publish, in the coming months, a “call for evidence” on the simplification and improvement of these processes.   

Actual changes arising from this will be some time off, if they happen at all.  The challenge here will be in devising a system that is simpler for businesses to operate, while maintaining an overall fairness and not being capable of manipulation or abuse. 

Structures and Buildings allowance 

This allowance, announced in the 2018 Autumn Budget, gives a small level of accelerated tax relief for businesses buying newly constructed non-residential buildings, or qualifying renovation or conversion.  The draft legislation to set out the formal basis for the reliefs has been published for consultation. 

Private residence relief 

This relief exempts from tax gains made on disposal of an individual’s own home.  Announcement was made at the last Budget that current extensions to the relief, that allow parts of the gain to be treated as exempt where the property was not lived in by the seller for a period up to disposal or where it has been let out, are to be restricted.  A consultation document will be published in the coming months. 

Other current issues 

Non-residents disposing of UK land and buildings 

From 6 April 2019, disposals of interests in UK land by a non-resident must be reported to HMRC within 30 days and a payment on account made of the capital gains tax arising. 

Autumn Budget 2018 

Our summary of last year’s budget can be found here, and an update on Entrepreneurs’ Relief that was amended post-budget can be found here. 

R&D Tax Reliefs

HMRC issued additional guidance on the application of Research and Development tax relief to technology companies last year.  These reliefs are valuable for many companies across a very broad range of industries. 

Our team would be happy to talk to you, if you have any questions regarding the Spring Statement.