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The Chancellor of the Exchequer, Philip Hammond, presented his first Spring Statement to the nation that would provide an update on existing announcements, the health of the economy and a report of progress on budget forecasts. All major tax and spending changes will now be made once a year at the Autumn Budget.
Here’s everything you need to know from the Spring Statement:
The Chancellor announced that the economy has continued to grow for the past 5 years and even exceeded expectations in 2017. Growth is expected to continue as inflation is set to fall over the next 12 months, and wages will rise faster than prices over the next five years.
Borrowing has fallen by three-quarters since 2010. In 2009-10 the UK borrowed £1 in every £4 that was spent. The Office for Budget Responsibility (OBR) expect that we will borrow £1 in every £18 this year.
Employment has increased by 3 million since 2010 – the equivalent of 1,000 people finding work every day. Predictions from the OBR show that 500,000 more people will be in work by 2022.
Manufacturing has had the longest period of expansion in 50 years.
The ongoing challenge with the UK’s housing market continues, but the Government has pledged an investment programme of at least £44 billion over the next five years to raise the supply of homes.
London will receive £1.67 billion to start building a further 27,000 affordable homes by the end of 2021-22
An estimated 60,000 first-time buyers have benefitted so far, following the announcement at the Autumn Budget to abolish stamp duty for first-time buyers of homes under £300,000.
In April 2018 the National Living Wage will rise to £7.83, worth £600 extra a year for a full-time worker. National Minimum Wage rates for under 25s and apprentices will also rise.
The tax-free personal allowance will rise to £11,850 from April 2018, meaning a typical taxpayer will pay £1,075 less income tax than in 2010-11.
Spring Statement 2018 announces that the next revaluation, currently due in 2022, will be brought forward to 2021. This will mean businesses can benefit from the change to three-year revaluations earlier, with the first taking place in 2024.
With growing concerns over plastic waste and the subsequent damage to the environment, the Government is seeking views on how best to use the tax system to encourage the responsible use of plastic. Taxes raised this way will be reinvested to encourage the creation of new, greener products and services. In addition, £20 million from existing budgets will be given to businesses and universities to research ways to reduce the impact of plastics on the environment.
The Spring Statement announced the first wave of funding to help improve digital and broadband connectivity to homes and businesses, providing over £95 million for 13 areas across the UK.
Digital technology has changed the way people shop, sell and save. While cash will continue to be an important method of payment, more people are moving towards digital payments every year.
The Government has set out its thinking on how the tax system can change to give a fair result for digital businesses.
If you would like any legal advice relating to anything from today’s Spring Statement, contact us for more information.