Spring Statement 2019
25 April 2019
This article was featured in the April 2019 issue of the magazine.
The CIPP policy team provide a summary
On 13 March 2019, the Chancellor of the Exchequer, Philip Hammond, gave his Spring Statement. (Visit http://bit.ly/2K5TmJ0 for details.) As anticipated, there were no surprises for payroll, pensions or reward in his short account, but minimum wage, apprenticeships and the employment allowance all featured.
Many of the commitments the Chancellor did announce hang in the balance as we wait to learn when the UK will be leaving the European Union (EU). If an exit deal is agreed, the government will hold a spending review which will conclude alongside the 2019 Budget and set departmental budgets, including three-year budgets for resource spending.
A new review is to take place on the employment and productivity effects of minimum wage rates in the UK, starting with a roundtable in April to be chaired by the Chancellor.
The government has published a new remit (http://bit.ly/2CY1Bkf) for the Low Pay Commission (LPC) asking for recommendations for the national minimum and living wage rates that should apply from April 2020. The LPC has already opened its annual consultation on this – the closing date for submissions is 7 June 2019 – and its report is to be submitted by October 2019. In addition, the LPC has its annual programme of visits around the UK (http://bit.ly/2K9bLEG) which allows it to hear directly from workers and businesses as to how their minimum wage recommendations are working ‘on the ground’.
The Chancellor announced the appointment of professor Arindrajit Dube to undertake a review of the international evidence on the impacts of minimum wages. The terms of reference, which can be found here: http://bit.ly/2G1z7YM, include considering the implications for future minimum wage policy in the UK, bearing in mind the aspirations the government set out in Budget 2018 to end low pay in the UK. The conclusions will inform work underway in HM Treasury and the Department for Business, Energy and Industrial Strategy considering the future remit of the LPC after 2020. This wider work will include broad consultation with a range of stakeholders.
As announced at Budget 2018, from April 2020 the employment allowance will be restricted to organisations with National Insurance contributions below £100,000 in the previous tax year. Draft regulations have been published inviting technical comments on the implementation of the reform.
In Budget 2018, the Chancellor announced measures would be introduced aimed at encouraging more businesses to employ an apprentice. The Spring Statement confirmed that the co-investment rate for smaller businesses taking on apprentices will halve from 10% to 5% and take effect from 1 April 2019. What is still not clear is whether the 5% contribution will only apply to new starters from April 2019 or whether this reduced contribution will also apply to levy-paying employers when their levy pot is empty.
This measure is in addition to the increase to the amount levy-paying employers are able to transfer to other employers, including those in their supply chains, which will increase from 10% to 25% from April 2019.
Making tax digital
The vast majority of valued added tax (VAT) registered businesses with a taxable turnover above the VAT threshold (£85,000) will be mandated to keep digital VAT records and send returns using compatible software from April 2019.
It was announced in July 2017 that the pace of mandation would be slowed and that making tax digital (MTD) will not be mandated for taxes other than VAT until at least April 2020. The Chancellor reaffirmed these plans and promised firms they would not face fines if they do their best to adapt. Similar reporting standards for income tax, expected to be introduced in April 2020, have been pushed back by at least a year; however, businesses can get involved in the income tax pilot now on a voluntary basis.
Tax avoidance, evasion and non-compliance
Since 2010, the government has: secured and protected over £200 billion of tax that would otherwise have gone unpaid; introduced over 100 measures to reduce avoidance, evasion and other forms of noncompliance; and continued to support taxpayers to get their tax right.
Alongside the Spring Statement the government published a paper (http://bit.ly/2Iacxic) setting out its approach and achievements in tackling tax avoidance, evasion and other forms of non-compliance. The paper: outlines the strategy and approach of HM Revenue & Customs (HMRC) to compliance for different taxpayers; details the government’s record in addressing areas where risks of non-compliance have been identified; and provides a summary of the government’s record of investment in HMRC and its commitment to further action.