The Autumn Statement 2016 was the first delivered by Philip Hammond in his role as Chancellor of the Exchequer and, for a moment, it looked to be his last, as Mr Hammond teased us with his resignation. Instead, it was announced that the Autumn Statement will become the Autumn Budget from 2018 and the Spring Budget will be replaced with the Spring Statement; we will have to wait to see what difference this makes!
Mr Hammond announced that plans to create a Budget surplus by 2020 have been scrapped in light of additional investment in infrastructure and innovation, including £1bn to be invested in upgrading Britain’s broadband and £2bn extra a year to be invested in research and development.
Key measures announced, or reconfirmed, today were:
- Tax advantages for employee shareholder schemes to be reviewed;
- Use of the flat-rate scheme for VAT to be reviewed, to ensure this is being used appropriately by all businesses;
- New penalties on the implementation of tax avoidance schemes which are later challenged and beaten by HMRC.
- Further details of a new NS&I bond will be announced in the Budget, with an expected interest rate of 2.2% gross, based on a maximum investment of £3,000 for three years;
- A ban on letting agents’ fees charged to tenants;
- No changes to the previously proposed welfare savings;
- Taper rate for Universal Credits to be reduced from 65% to 63%.
- The personal allowance is confirmed to increase to £11,500 in April 2017 and to £12,500 by 2020, with CPI increases thereafter;
- The basic rate band will be extended to £50,000 by 2020;
- The national living wage is to increase to £7.50 per hour from April 2017;
- Tax advantages of salary sacrifice schemes will be removed so individuals will pay the same tax as if they had received cash. However childcare, pension contributions, low emission cars and cycle to work schemes will be unaffected by the changes;
- Employers’ and employees’ national insurance threshold to be aligned at £157 per week from April 2017.
- 100% capital allowances due on the installation of charging stations for electric cars;
- Corporation tax rates will fall to 17% from 2020;
- Rural rate relief to increase from 50% to 100% from April 2017;
- Further investment in research and development;
- Changes to corporation tax loss relief rules from April 2017.
- Insurance premium tax will rise from 10% to 12% from June 2017.
- Fuel duty to be frozen for the seventh consecutive year.