Raymond Doherty 12 Mar 2019 03:54pm

"Sandwich filling" Spring Statement expected

The chancellor’s statement tomorrow is likely to be “the filling in a sandwich of Brexit votes”

The Spring Statement is expected to contain no tax or spending changes. “More probable is a summer ‘Brexit Budget’ when a clearer picture of the UK’s future relationship with the EU should allow the chancellor to set out something of a future economic roadmap,” according to Stella Amiss, head of tax policy at PwC.

“We expect a nod to the recently published consultation on the taxation of off-payroll workers. Environmental taxes are also still high on the agenda. The chancellor may take the opportunity to reaffirm his commitment to a new UK Digital Services Tax especially as the wider OECD discussions on taxing the digital economy continue,” said Amiss.

Last year Hammond revealed slightly-better-than-expected growth and borrowing figures with a few minor policies around SMEs.

Chris Sanger, EY’s head of tax policy, said, “Last year’s Spring Statement provided a platform to announce some blue sky thinking and a number of consultations to advance UK tax policy, but with HMRC and [the Treasury’s] resources and focus since then diverted to Brexit planning, the cupboard is likely to bare few, if any, new consultations and ideas to put before the House.

“That said, however, there are some big issues bubbling away in the background, such as the tax response to the Taylor Review on the role of the self-employed. But it is unlikely [the Treasury] will launch a consultation into this with their focus and efforts concentrated elsewhere,” added Sanger.

John Hawksworth, chief economist at PwC, pointed to “increasing evidence since the last OBR forecast in late October that Brexit-related uncertainty has dampened business investment and caused a marked slowdown in the economy”. He said GDP growth was just 0.2% in the fourth quarter of 2018 and could be even lower in the first quarter of this year.

Even if Hammond has a windfall he is not likely to spend it until the “fog of uncertainty” over Brexit has cleared, he added.