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TAX TIP TUESDAY: Spring Statement 2019 – What is Expected?

Our 5-minute read – Tax Tips – for UK doctors and dentists will help you save tax, get organised with your tax affairs and make sure you meet important deadlines with ease.

This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice. 

On 13th March (tomorrow), Chancellor Phillip Hammond will deliver his Spring Statement to the House of Commons. After the Autumn Budget, this is the most important announcement the Chancellor of the Exchequer will make, many calling it a “mini-budget,” as it serves to update the country on the economy’s health and set expectations for the year to come.

So what can we expect from this financial statement?

Financial Predictions

First and foremost, the chancellor is predicted to respond to the OBR’s financial predictions. While the government and OBR were on the same page regarding the country’s “end of austerity,” some recent actions may have given the UK a boost. The successful deficit reduction has helped to balance the budget, and that gain has already been allocated to the NHS – allaying years of concern around public sector cuts. The personal income tax allowance increase and the higher rate tax threshold have also contributed.

Compared to October, public finances are improving, but we expect the Chancellor to struggle with accurately forecasting growth this year.

Brexit implications

Of course, it could all change with the outcome of Brexit. It has been tough to plan for everything (thus many planning for anything) with deal negotiations being what they are. The Chancellor will have the latest official GDP statistics on construction, manufacturing, and public finances, but even armed with this information, the final deal reached on Brexit could derail the forecast completely. As it stands, it looks like another extension beyond the end of month deadline will come to fruition.

Chancellor Hammond might take the opportunity to turn this statement into a genuine budget announcement or he might discuss a “Brexit Budget” and focus more on tax and policy measures this time around.

Tax, Pensions, Investment, and Property

We should be getting an update on the government and businesses preparedness for the Making Tax Digital initiative. And we should also learn more about how IR35, tax changes that affect contractors, will be dealt with in the private sector.

Pension allowance cuts made years ago are starting to impact high earners this year. Their lifetime allowance, tapered annual allowance, and money purchase allowances have all been affected, but unfortunately, the government is unlikely to address these concerns in this statement.

Investors need to pay attention if the OBR does as expected, and downgrades Britain’s economic growth expectations, to keep an eye on business performance, and fluctuations in both Sterling and interest rates.

Experts don’t anticipate a lot of discussion on the property market, but tax regulations may merit a deeper review of the housing sector before the Autumn Budget.

Not to worry! DMFS will be releasing a Spring Statement guide shortly following Chancellor Hammond’s announcement, so be sure to keep an eye out for this summary, with the most important information about money, tax and financial planning, hand-picked for our readers.

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