The Spring Budget is labelled as “Budget for Long Term Growth”, focusing on “lower taxes, better public services and more investment”

The Economic Context:
(The UK) economy turning a corner, with inflation expected to fall to target next quarter, wages consistently rising faster than prices and better growth than European neighbours.

Main Announcement

• A 2p Employee National Insurance tax cut from 10% to 8% in April for 27 million working people.
• VAT registration threshold from £85,000 to £90,000
• Orchestras, museums, galleries and theatres will also benefit from a permanent 45% tax relief for touring productions and 40% relief for non-touring productions, while £26 million will fund maintenance and repairs at the National Theatre.
• The ‘non-dom’ regime will be replaced by a simpler system where arrivals have access to a more generous scheme for their first four years of tax residency before paying tax in the same way
• Multiple Dwellings Relief will be abolished from June after showing no evidence of promoting investment in the private rented sector – raising £385 million a year – and the Furnished Holiday Lettings tax regime will be abolished from April 2025.

Tax Free shopping ( VAT RES Scheme)

• (Spring Budget 5.34) The government is grateful to the OBR for their review of the original costing of the removal of tax-free shopping. The government will consider these findings alongside industry representations and broader data, and welcomes any further submissions in response to the OBR’s findings
• The OBR suggestion: this measure (abolishing tax-free shopping) is unlikely to affect significantly the productive capacity of the economy.

Chief Executive’s response
“It is very disappointing that the Treasury has not yet responded to the overwhelming evidence and calls from businesses across Britain about the damage being done by Britain now being the only European country not to offer tax-free shopping to international visitors.

The Treasury has also not responded to evidence of the massive growth opportunity from making Britain the only major European country where the 450million EU residents could shop tax-free.

We continue to call for an independent assessment into the full impact of tax-free shopping. We have not yet had that.

All the OBR has done is to review its very limited forecasts of 2020 with no account made for the impact of the growth in spending by international visitors across Europe. And has not even mentioned the new EU market potential.

The Chancellor has stated that “the government is grateful to the OBR for their review of the original costing of the removal of tax-free shopping. The government will consider these findings alongside industry representations and broader data, and welcomes any further submissions in response to the OBR’s findings. We look forward to continuing our discussions with them.”

You can read the Chancellor’s Budget Speech here
You can see full details of the Budget here
You can read the OBR report here
You can see the Treasury news release here