Chancellor looks to ‘build the foundations’ for a global future
Chancellor Philip Hammond set his stall out to “build the foundations for a stronger, fairer, more global Britain” but as expected did not loosen the Treasury purse strings.
He told a packed House of Commons that “the only responsible course of action is to continue with our plan”, ensuring his Budget speech was light on surprises.
Delivering his first and last Spring Budget – the annual event is being rescheduled to the autumn to enable greater time to prepare ahead of the new financial year – the Chancellor trumpeted an improvement in the short-term forecast for growth.
The Office for Budget Responsibility’s updated its growth forecasts, now forecasting 2% this year – compared to its previous forecast of 1.4% – before slowing to 1.6% next year.
It also improved its borrowing forecast, which is to be £16.4bn lower than had been expected in the autumn for the current financial year, at £51.7bn.
Although borrowing is then expected to rise to £58.3bn next year, it is forecast to reduce to £16.8bn by 2021-22.
Hammond set out measures to address the business rates controversy, although stopped well short of major reforms. He introduced three measures – a transitional relief cap for any business coming out of Small Business Rate Relief, a £1,000 discount for 90% of pubs on their business rates relief, and a £300m fund for local authorities to deliver discretionary relief.
He announced measures targeting the self-employed, aiming to create a “fairer” approach by making changes to National Insurance that will raise £145m a year.
He also reduced the tax-free dividend allowance for directors and shareholders by 60% to £2,000 from April next year as part of an attempt to ensure “that those with the broadest shoulders bear the heaviest burden”.
The Chancellor also announced £23m funding for the Midlands to address pinch-points on the road network and confirmed the Midlands Engine strategy will be published tomorrow.
Hammond added: “Last November, I set out our plan to build an economy that works for everyone. To enhance our productivity and protect our living standards, to restore our public finances to balance and to invest for our future.
“Today’s OBR report confirms the continued resilience of the British economy and at this Budget we continue with our plan.”
Matt Hodgson, tax partner at PKF Cooper Parry’s Birmingham office said: “The tax measures announced were of limited significance for business and as predicted were designed to not rock the boat in a time of Brexit uncertainty.
“The increase to the taxation of the self-employed does seem aimed at individuals who, in the absence of a limited company would – or should – otherwise be taxed as employees.
“I’ll also be very interested to see how HMRC will be reducing the administrative burden associated with businesses making R&D claims as any reduction in complexity to these rules will be very welcome.
“Perhaps the most significant non-tax related announcement will be the publishing tomorrow of the Midlands Engine Strategy which will hopefully set the region on the same footing and profile as the Northern Powerhouse.”
