The new Chancellor, Phillip Hammond, presented his first Autumn Statement, against the backdrop of Brexit, Trump and under the direction of a new Conservative regime.
Our experts at Campbell Dallas were on tenterhooks in anticipation of what many thought would be a very interesting Statement. Indeed, it did not fail on that front.
Below we set out some of the key stand-outs from Hammond’s first (and last) Autumn Statement.
- This will be the last Autumn Statement as we know it. From 2018 there will be a Spring Statement and the main Budget will take place in the autumn. To ready for this, it has been confirmed that in 2017 there will be two Budgets; both a spring and an autumn one.
- Salary sacrifice for BIK (Benefits in Kind), for the likes of mobile phone contracts and gym memberships will be scrapped. However pensions, childcare, low emission cars, and cycle to work schemes will be exempt, so there are still tax saving incentives available for businesses in these areas. Note that there are phase out timescales for the benefits affected.
- Commit to cut Corporation tax to 17% by 2020, but not as low as 15% as previously proposed by George Osborne. This is still an incredibly low rate, well below that of many other major countries (more than half the current US rate) and a huge business tax break for multinationals contemplating locating their activities in the UK.
- It was announced that an estimated £2b will be raised from a clamp down on Tax Avoidance schemes. This is perhaps the price to pay for a low corporation tax rate and a lower capital gains tax rate of 20% for individuals. We are seeing that there has been not only a complete clamp down on so called aggressive planning structures, but a wider tightening of the general tax compliance regime by HMRC and a harder line taken in genuinely commercial situations.
- Insurance Premium Tax will increase from 10% to 12% by June 2017, having an impact on the consumer cost of insurances (car, home, buildings, etc).
- The higher rate tax threshold will rise to £50K by the end of this Parliament as planned. Note that the Scottish Government have set their own higher rate tax threshold and it cannot be anticipated that they will raise it beyond more inflationary increases from the current £43,000 threshold.
- More money for devolved parliaments for infrastructure projects, with an extra £800m for Scotland.
- More complexity in the R&D tax credits regime, although there is a promise to build on the existing above the line regime (RDEC).
- £1bn funding for upgrading digital infrastructure, including 5G mobile. A huge opportunity for many of our Scottish based tech companies.
Our experts are always available to discuss any concerns or thoughts. Speak to your usual contact, or your nearest office.
The information in this news item should not be regarded as financial advice. This is based on our understanding in November 2016. Laws and tax rules may change in the future.