Spring Statement 2018 predictions: the detail will all be in the fine print

This year’s Spring Statement scheduled for 13 March is predicted to be a short speech from Chancellor of the Exchequer Philip Hammond. The main topic is expected to be a response to the economic and fiscal forecasts from the Office of Budget Responsibility (OBR), since it has been announced that there will now only be one fiscal event a year (at the Autumn Budget). However, as the Spring Statement will be used to launch consultations on proposed tax changes, there will be plenty of detail on taxes in the fine print.


A key factor in the OBR’s forecasts will be the assumptions it makes as to the impact of Brexit. Its November 2017 forecast made the following assumptions:

  • The UK leaves the EU in March 2019
  • Negotiating a new trade agreement with the EU and others slows the pace of import and export growth of the 10 years following the referendum
  • The UK adopts a tighter migration regime following departure from the EU than it currently has.

Whether it is able to update these assumptions significantly in its March 2018 forecasts will be interesting to see. If they have not already reached it, businesses will be getting to the stage where they will need to take action to deal with the possible implications of Brexit. Review of supply chains and the structure of cross border operations and on financing arrangements may be high up on the agenda from a tax perspective.


As noted above, we expect a raft of other documents relating to fiscal aspects of the UK economy to be released on 13 March and shortly after. Indeed, the Autumn Budget forewarned us of some upcoming consultations. The consultations will relate to matters scheduled for Finance Bill 2018-19 and we summarise some of the more critical tax issues here. A list of tax related consultations outstanding and expected can be found here.

Taxation of royalty payments in respect of intellectual property, the Government’s direction on the digital economy, and the review of the intangible assets regime

At the November 2017 Budget and shortly thereafter, two consultations on taxation of the digital economy were issued, one looking at the UK’s general approach, the other proposing to apply a royalty withholding tax on non-resident businesses making payments to certain offshore jurisdictions in respect of intellectual property rights exploited in the UK in circumstances where there is otherwise no UK taxable presence. Recent reports indicate the UK may also be considering a revenue or sales tax for digital businesses.

Other jurisdictions either have considered, or are considering, measures targeting the digital economy (such as India and Italy). The European Commission has indicated it will make an announcement on the issue on 21 March 2018 and the OECD is expected to comment shortly after that. This is an area of taxation that, ideally, needs international consensus if double taxation is to be avoided.

The recent consultation on possible reform of the UK’s corporate intangible assets regime is timely. It is an opportunity for businesses to input into a policy initiative which could see a more co-ordinated and competitive approach to taxation of intangible assets with the aim of attracting further business to the UK. Due to the recent issue of this consultation, there may be no further developments on 13 March.

Employment status

There was a lot of interest in the findings of the Taylor review of modern working practices published in July last year. Four consultations were issued in February 2018 in connection with the report’s recommendations, including one on employment status. Although the results of this consultation will not be available before 13 March, comments connected with it will be eagerly considered by employers and workers, to see if they give any indication on how reforms will impact tax on workers operating in the gig economy.

Making tax digital (MTD)

There is a clear date for commencement of MTD for VAT from 1 April 2019. Consultation has taken place on regulations to implement this, as well as regulations for the implementation of MTD for income tax. Financial Secretary to the Treasury, Mel Stride has already indicated MTD for income tax and corporation tax will not be introduced before April 2020. It will be interesting to see whether there is any further news on how MTD will be implemented for these taxes, and whether there will be any exception from corporation tax MTD for larger businesses in the same way as has been indicated for larger partnerships with respect to income tax.

Property tax

The consultation on bringing non-UK resident owners of UK immovable property within the scope of UK corporation tax announced an anti-forestalling rule. This concerns the use of ‘treaty shopping’ to avoid exposure to the imposition of capital gains tax to this sector from April 2019. The anti-forestalling applies from 22 November 2017, yet there is currently no draft legislation for this measure. It is to be hoped that the first draft of this legislation will be available by at least 13 March.

Consultation on the planned application of corporation tax to non-resident corporate landlords is planned for summer 2018, whilst the commencement of this change is scheduled for April 2020. The staged introduction of corporate non-resident landlords to full UK tax on their UK property activities does not give the appearance of co-ordination on property policy initiatives.

While the Welsh Government has announced it plans to experiment with a new vacant land value tax, other measures will apply in other parts of the country. These other measures include reforms to the community infrastructure levy and initiatives for defined areas such as the Milton Keynes, Cambridge, Oxford corridor.

The number of first time buyers of UK residential property reportedly increased to an 11 year high in 2017, though the first time buyers’ relief from SDLT in England and Wales was only introduced from 22 November 2017. It remains to be seen whether this, and the proposed Scottish first time buyers’ relief from LBTT and the revised rate structure for LTT (Land Transaction Tax in Wales from 1 April 2018) will have any real impact for first time buyers, or simply increase returns to residential property vendors. Some commentators have suggested reforms to the way stamp taxes work, such as turning them into a tax on the vendor, for residential property and it will be interesting to see if there are any announcements in this area.

For the latest news and views before, during and after the Spring Statement, please visit our dedicated tax blog, Let's Talk Tax