The Autumn statement 2016 was to be Philip Hammond’s first and last as it is being abolished. In future there will be just a Budget in the autumn, leaving plenty of time for implementation and a Spring statement which will be a Government response to the 6 monthly OBR report. Many of the announcements had already been leaked, perhaps an indication of the little respect which the Chancellor held for the Autumn Statement 2016. The main points of interest to the SME sector and private individuals were as follows:
- The economy is resilient, and despite the post Brexit uncertainties, growth is still expected to be stronger than our European neighbours, however we still have much to do about productivity.
- The tax take for the year is lower than expected and the blame seemed to be laid at the feet of self employment and new incorporations
- The Chancellor does not seem to realise that much of the strength of the economy lies with these business owners however small they are, and without them unemployment would be sure to be higher
- To make the UK economy more attractive there is to be significant investment in productivity, R&D, the housing sector and the transport network
- There was however no specific announcement regarding the Lower Thames Crossing which is of much interest to the residents of Dartford and Gravesham, this may be announced later in the small print
- The government are sticking to the commitment to reduce corporation tax to 17% by the end of this Parliament
- The threshold from which employers and employees NI starts to be deducted is going to be equalised from April 2017, this was a quirk in the tax system that never made much sense!
- As a pure tax raising measure Insurance Premium Tax (IPT) is going to be increased from 10-12% from June 2016, an immediate increase in insurance premiums
- There was a veiled threat to the contractor industry (IR35) where “people doing the same job should get the same pay” – more details to follow, it appears there may be yet another consultation!
- The VAT flat rate scheme will be tightened to avoid abuse, I assume this will relate to the registration process, and choosing the correct industry sector
- £2bn will be raised by clamping down on tax evasion and inappropriate use of avoidance schemes
- The commitment on personal tax allowances remains, to increase them to £12,500 and £50,000 for the 20% and 40% tax bands respectively
- The National Living Wage will increase from £7.20 to £7.50 from April 2017
- To encourage savings a new NS&I investment bond is going to be introduced paying 2.2% gross interest
- Not unexpected but fuel duty is being frozen again, for the 7th year in a row and is the longest freeze in 40 years. It would be interesting to compare fuel costs at the beginning and end of the last 7 years.
It seems likely that the Spring Budget will have very few measures mentioned as the government save them for the autumn when the effects of Article 50 may have worn off a little and there will be more confidence going forward. As with all Statements and Budgets there will be more issued in Press releases but outside of the usual political gesturing, very little news. You should seek professional advice before taking any steps based on these contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”