When delivering his Spring Statement on 13th March 2018, Chancellor Philip Hammond took a reassuring stance, insisting that it would give people and businesses certainty and stability in order to plan for the future. The economic forecasts outlined by the Office for Budget Responsibility (OBR) for growth have been revised up to 1.5%, up 0.1% on the forecast announced in November. Borrowing also fell to £45.2 billion in 2017/18, £4.7 billion lower than the OBR’s forecast outlined in the last Budget.
Overall, this Statement was again light on new announcements, let alone those related to financial planning. The chancellor has made it clear that major tax or spending changes will now be made once a year during the Autumn Budget.
Key highlights include:
- The Office for Budget Responsibility (OBR) revised its forecast for growth up to 1.5% – a rise of 0.1% on the previous forecast announced in Autumn Budget 2017.
GDP is expected to fall back to 1.3% in 2019 and 2020 as the OBR left its November 2017 forecast unchanged.
Borrowing fell to £45.2 billion in 2017/18 –£4.7 billion lower than the OBR’s forecast in November 2017, while Hammond conirmed any further borrowing is expected to fund capital investment only.
Debt is also expected to start falling as a share of GDP in 2018/19, according to the OBR.
Aside from updated economic forecasts, the rest of the chancellor’s attention focused on policy consultations – some new, others previously announced. These consultations may feed into Autumn Budget 2018.
The tax-free dividend allowance will reduce from £5,000 to £2,000 from 6 April 2018.
The bands and rates at which people in Scotland pay income tax have been changed for 2018/19, but it will be business as usual for taxpayers in the rest of the UK.
Businesses need to be aware that from 6 April 2018, the minimum employer contribution towards an employee’s workplace pension will increase from 1% to 2%. These contributions are usually mandatory for workers aged between 22 and state pension age, earning more than £10,000 a year.
National minimum wage rates for all ages and apprentices are increasing from 1 April 2018. For 18 to 20-year-olds and 21 to 24-year-olds, it will be the largest increase in a decade.
The lifetime allowance, which is the maximum amount an individual can draw from pensions without incurring extra tax charges, rises to £1.03 million from 6 April 2018.
The overall annual ISA subscription limit remains at £20,000, although the Junior ISA allowance increases to £4,260 from 6 April 2018.
For more details please download our Spring Statement report.
The way in which tax charges (or tax relief, as appropriate) are applied depends upon individual circumstances and may be subject to change in the future. The information in this report is based upon our understanding of the Chancellor’s Spring Statement 2018, in respect of which specific implementation details may change when the final legislation and supporting documentation are published. This document is solely for information purposes and nothing in this document is intended to constitute advice or a recommendation. You should not make any investment decisions based upon its content. ISA and pensions eligibility depend on personal circumstances. The value of investments can fall as well as rise and you may not get back the full amount you originally invested. Whilst considerable care has been taken to ensure that the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information. All tax tables include numbers, rates and allowances only. None of the usual qualifying notes are included in this report.