United Kingdom to levy 2pc digital services tax against tech giants from 2020

Chancellor of the Exchequer Philip Hammond prepares his speech in his office in Downing Street London ahead of his 2018 Budget announcement on Monday. PRESS ASSOCIATION

After weeks of turmoil over Brexit Tory MPs will be looking to the Chancellor to raise party morale with his annual financial statement

"Facebook is massive in this country, it earns huge advertising revenues and yet the singer Ed Sheeran paid more tax previous year than Facebook did".

The IFS said it was debatable whether the budget heralded the end of austerity, but it added that the plans marked a change of fiscal direction for Britain.

The tax would come into effect in April 2020 following a consultation, Philip Hammond stated in his 2018 Autumn Budget yesterday (29 October).

"Any idea that there is a serious desire to eliminate the deficit by the mid 2020s is surely for the birds", IFS director Paul Johnson said.

Scotland's Finance Secretary has pledged to take a "more progressive approach" to income tax than Philip Hammond when he delivers Holyrood's budget.

While many welcomed the Government's ongoing commitment to increase spending on R&D across the economy in a bid to boost productivity, there was criticism of the fact that there was no further update on the Chancellor's proposed reforms to the EIS fund structure to encourage investment into early-stage firms deemed highly innovative.

Hammond declared the end is in sight for the budget cuts implemented by a series of Conservative-led governments after the global financial crisis, reiterating a commitment made by Prime Minister Theresa May this month.

Paul Johnson, director of the Institute for Fiscal Studies, said: "He's just simply chose to spend all of that".

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A disorderly Brexit "could have severe short-term implications for the economy, the exchange rate, asset prices and the public finances", warned the Government's independent forecaster.

However, he rejected suggestions that this might mean reversing spending decisions announced in the autumn Budget, expected to include a £2 billion increase in mental health funding and nearly £30 billion for roads.

The change, which was not mentioned in Mr Hammond's Commons statement, will mean that higher earners will pay £365 extra in NI contributions, wiping out half of their £730 windfall.

Although spending on the NHS will rise "substantially" as a result of the "big upward revision" to overall spending plans announced by the Chancellor on Monday, the rate of improvement will be "nothing particularly historic", remaining lower than the average over the health service's 70-year history, said Mr Johnson.

Instead, they were left with income tax savings of £495 when taking national insurance into account.

Labour leader Richard Leonard has warned he will not back tax cuts for Middle Earners in Scotland similar to those set out for workers elsewhere in the United Kingdom in the budget.

She said: 'We are ending austerity, we are bringing debt down, we are putting more money into our public services'.

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