Chancellor Philip Hammond has delayed the start date of the government’s digital tax reforms for the smallest businesses and set out plans for greater investment in 5G research.
Hammond has issued his first and last Spring Budget – Photo credit: PA
Hammond had billed his first – and last – Spring Budget as being a cautious one, and during his speech in the House of Commons he said it was focused on “getting Britain back to living within its means”.
The Office for Budget Responsibility has estimated that the UK’s deficit will be £51.7bn for 2017, which is a decrease on the estimate it gave in November 2016 of £68.2bn – however Hammond opted to keep back funds to prepare for any shockwaves related to Brexit.
In his speech, Hammond said the government’s aim was to build a “strong, fairer and more global” country, which he said meant creating a “fair, stable and competitive tax system”.
He announced a series of tax measures – including a drop in corporation tax, tougher penalties for tax avoidance and a controversial hike in national insurance contributions for self-employed workers.
Hammond added that, “in a digital age, it is right that we develop a digital tax system”, referring to reforms that will require businesses to issue quarterly digital updates to HMRC and file their annual tax return online.
However, the speed at which HMRC is going ahead with the reforms has caused concern from small businesses – who say they will not be ready in time for the April 2018 start date – and from MPs on the Treasury Committee.
As such, Hammond said, that unincorporated businesses with a turnover below the VAT registration threshold there would be a delay of one year to the introduction of quarterly reporting.
The Budget said: “This will provide them with more time to prepare for digital record keeping and quarterly updates.”
Hammond also set out measures aimed increasing the govenrment’s use of 5G technology – which will become more important as the country increases its use of internet-connected devices and autonomous vehicles.
There will be a £16m collaborative National 5G Innovation Network to trial new 5G technologies as part of a wider national 5G strategy that was also published today.
The Budget also set out funding for national infrastructure projects to come from the National Productivity Investment Fund, which was announced in the 2016 Autumn Statement.
This includes the roll-out of full-fibre broadband – which was also highlighted in the government’s Digital Strategy last week – and alongside it there will be a Digital Infrastructure Investment Fund that will see a £400m government investment “at least matched by private sector investors” to speed up this roll out.
There were also announcements of funding within the already-announced Industrial Strategy Challenge Fund, including investment into artificial intelligence and robotics and electric vehicles – both of which are areas that have been identified as funding beneficiaries in previous government announcements.