The Chancellor today (13 March) unveiled his first Spring Statement, responding to the Office for Budget Responsibility’s (OBR) economic forecasts and announcing a number of consultations and calls for evidence. The UKHospitality response is available here. UKHospitality will be responding to each of these in due course.
The OBR published its latest economic and fiscal outlook and the key outputs are shown below. GDP is expected to grow throughout the forecast period, though at relatively low levels. Employment is forecast to grow, and the unemployment rate is expected to remain relatively flat. There is an anticipation that household consumption rates will dip from current levels of growth, and remain below the level of inflation.
Business rates – the Government announced that the next business rates revaluation will take place in 2021, one year earlier than previously planned. Subsequent revaluations will take place every three years. In practice this means that the revaluation process will begin from around April 2019 with rental value / business performance based on the financial year 2018-19. It also conveniently moves the revaluation out of the next scheduled General Election year.
Plastics – a call for evidence was published looking at ways to reduce plastic waste through economic incentives to influence consumer behaviour. The call for evidence is wide-ranging and looks at the definition of single-use plastic and the different stages of the supply chain where interventions can be made. Deposit and returns schemes are out of its scope.
VAT – as had been agreed between the Conservatives and the DUP a call for evidence on the impact of VAT and Air Passenger Duty in Northern Ireland has been launched. This looks at the impact of these taxes on demand, business reaction to reductions and revenue implications.
Corporate tax and the digital economy – the Government has updated its position paper on this issue following a consultation to which responses were made earlier this year. The most significant development in this area is that Government has stated that in the absence of an agreed international framework on digital taxation, ‘there is a need to consider interim measures such as revenue-based taxes’. While UKHospitality does not support additional taxes for the sake of it this we have linked this to business rates as a potential solution to reducing taxes on property-based businesses.
Threshold for VAT registration – a further consultation was published on this issue. At the Autumn Budget Government announced that they were not minded to reduce the threshold for registration for VAT. This consultation looks at further simplification options, and in particular at why businesses choose not to grow beyond the current £85,000 threshold. The paper looks at three options, one a harmonised EU approach, one involving administrative changes and one that involves a smoothing of the cliff-edge currently experienced at the threshold.
Cash and digital payments in the new economy – a broad consultation on how digital payments could be supported, including looking at the cost to business, and the future of cash.
There was also a proposal to support small businesses with the apprenticeship regime, with additional funding of around £80 million. Funding will additionally be made available to support businesses with the introduction of the new T-levels and the work placement element. Departmental funding allocations were also announced as part of the ‘Brexit contingency’ fund, to allow changes to be put in place to get the UK prepared for leaving the EU.