What does the Spring Statement mean for you?
The Spring Statement is one of two statements made by the Treasury every year – the second being the Budget which is announced in the Autumn.
On 13 March, Chancellor Philip Hammond delivered his Spring Statement to the House of Commons. Since the Budget has moved to the Autumn, the Spring Statement does not feature significant changes to tax or spending and instead acts as more of an update on how the economy is doing.
In his statement, the Chancellor gave financial predictions based on data released from the Independent Office for Budget Responsibility (OBR), a body that acts as Britain’s fiscal watchdog.
Below are some of the highlights from the Spring Statement 2019.
There are no changes to tax
There were no major tax announcements in the Spring Statement 2019.
The potential ‘Deal Dividend’ has increased
The Chancellor has set aside a fund reserve to deal with the possible disruption of Brexit, and it was announced that this has now risen to £26.6bn. If the Brexit deal is done and the UK gets a controlled exit from the European Union, then this reserve of money can be diverted as the Chancellor wishes.
The economy is growing – but slower than predicted
The OBR forecasts that our Gross Domestic Product (GDP), or the total value of goods produced, and services provided in the UK during one year, will grow by 1.2 percent. This figure is forecasted to rise to 1.4 percent in 2020 and 1.6 percent for the following three years after. Growth is good for jobs and wages, in fact the OBR predicts 600,000 new jobs by 2023 and an increase of three percent wage growth every year for the next five years.
Help for Small Businesses to arrive sooner
A £700 million package of reforms to help small businesses take on more apprentices, announced in the Autumn Budget, is to be brought forward to the start of the new financial year in April. See below for other changes that come into effect at the start of the new tax year.
Help for would be homeowners
£3bn of funding was announced to help deliver 30,000 affordable homes.
Public services will benefit
The Chancellor announced an additional £100m over the course of the next year, to pay for extra police time.
Despite there being no new announcements in the Spring statement, here is a quick reminder as to what was announced in the Autumn 2018 Budget.
More tax-free personal allowance. The personal allowance – the amount you can earn without paying any income tax – will be raised from £11,850 to £12,500. This means that a basic rate taxpayer will pay £1,205 less tax in 2019-20 than in 2018-19.
More income tax relief for higher wage earners. The threshold at which people start paying the higher rate tax will increase from £46,350 to £50,000. This means that in 2019-20, there will be nearly 1 million fewer higher rate taxpayers than in 2015-16.
More money for those on universal credit. £1 billion has been set aside to top-up payments for those transferring to universal credit from other benefits. Work allowances – what people can earn before their Universal Credit is reduced – will be increased by £1,000/year.
More money for over-25s on the national living wage. This will rise from £7.83/hour to £8.21 an hour.
More money for the NHS. An extra 20.5bn has been committed for the NHS over the next five years.
More money for schools. An extra £400 million will mean £10,000 more for the average primary school and £50,000 more for the average secondary school.
More money for social care. Local authorities in England will receive a further £650 million in social care funding next year.
More money for road repairs. Local authorities in England will be given £420 million for road repairs.
More tax for large tech companies. To help raise revenue, the Chancellor announced a £400m-a-year levy on larger tech companies, such as Google, Facebook and eBay.
No increase on the annual ISA allowance. The annual ISA allowance will remain at £20,000 in 2019/20. You can read the full 2018 Budget here.