The spring season will no longer see a buzz in the financial corridors of the UK, now that the Chancellor has moved the budget from spring to autumn. Revisions to taxes and policies will not be taking place around this time of the year anymore.
However, the financial statement that will now be released in spring every year is enough to create a stir and give us a reason to write a blog again. Following are some of the major highlights of the Spring Statement 2018:
Revival of the Economy
In the Chancellor’s speech that lasted 26 minutes, the line that caught the most media attention is ‘light at the end of the tunnel’. It comes at a time when the market continues to be wary of the gloom that has spread over the economy. The negative market sentiment has refused to subside despite continued efforts and assurance from the government.
Since the financial crisis that shook the UK economy a decade ago, it is the first time that there has been a sustained fall in debt. The chancellor has deemed it as a turning point in the recovery of our nation’s economy. The GDP growth that was predicted in the autumn budget for the year 2018 has increased to 1.5%.
For 2019 and 2020 however, the prediction remains unchanged. But what makes us doubtful about sustained recovery of the economy is the revision in the GDP growth’s prediction for the years 2021 and 2022, as it has been brought down by 0.1% for each year.
But there have also been some improvements in the economy. National debt is expected to fall quicker than was previously predicted. Over the next 12 months, inflation will hopefully return to its 2% target.
The forecast for borrowing this year is £4.7 billion lower than what was forecasted last November and it is expected to be £45.2 billion. Borrowing as a percentage of GDP is expected to reach its lowest in 2022-23 and to reach 0.9% of the GDP. As of today, this figure stands at 2.2% of GDP and has been predicted to plunge to 1.8% in 2018-2019.
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Business Rates Revaluation Relief
The last time business rates were revaluated, business professionals were handed hefty bills and this move was severely criticised by the lobby of entrepreneurs. It has now been declared that business rates will be revaluated again in 2022 and thereafter they will be revised every three years.
The lesser productive businesses have been asked by the government to get inspired by the more productive businesses and find a way to eliminate the common enemy of all businesses, which is late payments.
Additionally to encourage the growth of SMEs, the chancellor has decided to give them an £80 million boost.
The land remediation fund has given the government a grant of £100 million which will make way for the construction of 215,000 homes in the West Midlands. The project is expected to be completed by 2030/31. Also, the government initiative known as the Housing Growth Partnership has been doubled to £220 million.
Taking a step towards affordable housing, the Chancellor announced that London has been given a further £1.7 billion to get 26,000 homes constructed each year. This would result in the construction of 116,000 affordable homes in London by the end of 2022.
In order to make high speed broadband available to local areas, the first wave of funding has been rolled out from the challenge fund which has £190 million allotted to it. This fund will be utilised to provide high speed internet services to at least 13 areas across the UK.
Tax on Single use plastics
In a bid to change consumer behaviour, a call for evidence has been issued on plastic pollution. The Chancellor said that the tax system could be utilised to bring about the necessary change in behaviour of consumers towards utilisation of single use plastics.
The Chancellor has also announced that a new VAT collection system will be put in place, which will ensure that the VAT paid online reaches the treasury.
If you have been experiencing troubles with payment of taxes and need guidance with managing them efficiently, you can get in touch with us and we will take care of your every accounting need. We understand that the waters can get a little murky whenever a new statement is released from the chancellor, but it’s our job to remain in the loop at all times, so that we can ensure our clients are ticking all the right boxes, at all times.