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Hammond’s economic forecasts: the lowdown

Chancellor Philip Hammond today unveiled the latest economic forecasts from the Office for Budget Responsibility (OBR) in his Spring Statement to MPs.

There were – predictably – disagreements about who was to blame for the state of the public finances and the impact on public services, leading to some ill-tempered exchanges.

As expected, there weren’t any policy announcements in the 15-minute speech, as these will be the centerpiece of the Autumn Budget. Instead, Hammond forecast that the economy will be in slightly better shape than expected by the OBR.

With regard to the national debt, Hammond claimed “There is light at the end of the tunnel” but that the debt was still too high. That he was committed to keeping taxes low, would “unleash creators and innovators’ and build a “Britain fit for the future”.

Countering this, Shadow Chancellor John McDonnell claimed that the government had not tackled the deficit at all, but passed it onto local councils and public services, that business investment had stagnated and there was a “crisis in our communities”.

Cutting through the noise – here’s how today’s statement might affect you as a freelancer, contractor or small business owner:

Spring Statement implications for the self-employed and small businesses

  • A review will be undertaken of how late payments can be avoided. This is a consistently problematic issue for small businesses, so any movement on this would be an overdue step forward.

  • £80m will be set aside to help small firms take on apprentices – this will be elaborated on in an announcement by Education Secretary Damian Hinds.

  • The Chancellor said he would bring forward the business rates revaluation to 2021 and that they’d be revalued once every three years from that point forward.

  • A consultation will be held on a new VAT collection mechanism for online payments, with further investigation of how to encourage digital payments.

  • On environmental issues, Hammond says he will publish a call for evidence on whether the tax relief for agricultural diesel contributes to air pollution. He’ll consult on tax cuts for low-emission vans and what can be done to reduce the use of plastics.

Notably, no announcement was made in the Chancellor’s statement on the status of the planned consultation on the extension of IR35 rules currently in place for the public sector, to the private sector.

As always, Crunch will keep you up to date on any developments in tax or policy that could affect freelancers, contractors, small businesses and the self-employed.

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