The Chancellor of the Exchequer, The Rt Hon Philip Hammond has announced the Autumn Statement 2016, which amongst other things, unexpectedly announces the abolition of the Autumn Statement, to be replaced with a Spring Statements from 2018.
Borrowing is forecast to be £122bn higher in the period until 2021 than previously thought, however the Chancellor has vowed to make the UK economy “resilient”.
While cuts will be eased, the Government remains committed to restoring public finances at the earliest possible date. Departmental spending plans, as set out in 2015 Spending Review, will remain in place although previous commitments to protect key public services, defence, overseas aid and the pension "triple lock" will continue until the end of the Parliament (7 May 2020).
The key announcements of the Autumn Statement are as follows:
- - The income tax personal allowance will rise to £11,500 in April 2017, from £11,000. This will rise to £12,500 by 7 May 2020
- - The higher rate income tax threshold will rise to will rise to £45,000, from £43,0001. This will rise to £50,000 by 7 May 2020
- - After 7 May 2020, the personal allowance will rise in line with the consumer prices index measure of inflation, as opposed to the national minimum wage. This will bring the way in which the allowance is increased in line with the higher rate threshold
- - Tax savings on salary sacrifice and benefits in kind are to be stopped, with exceptions for ultra-low emission cars, pensions, childcare and cycling
- - The National Living Wage is to rise from £7.20 per hour to £7.50 from April 2017
- - Equalisation in employee and employer National Insurance thresholds at £157 per week from April 2017. There will be an increase in the threshold for employers of £2 and £1 for employees
- - Insurance premium tax is to rise from 10% to 12% in June 2017. This aims to help the government to fund flood defences and future resilience
If you require any advice around your Tax Planning or advice on how the Statement may affect you, contact our Tax Specialist Linda Reid.
- - The Universal Credit taper rate (the percentage of benefits a claimant will lose for each pound they earn) is to be cut from 65% to 63% from April 2017. For every £1 earned over the work allowance, the eligible claimant’s Universal Credit will be reduced by 63p in place of 65p
- - There were no plans for further welfare savings announced for this Parliament.
- - Upfront fees charged by letting agents in England are to be banned as "as soon as possible". This is predicted to come into effect within the next 1-2 months
- - A £2.3bn housing infrastructure fund will help to provide 100,000 new homes in high demand areas, and a further £1.4bn to deliver 40,000 extra affordable homes
- - The annual fuel duty rise has been cancelled for the seventh year in a row, at a cost of £850m, saving the average car driver £130 and van driver £350 per year
- - For the oil and gas sector, Carbon Price Support will be capped until 2020 and business rate reductions worth £6.7bn will be implemented
Transport / infrastructure / regions
- - £1.1bn extra will be invested in English local transport networks
- - £220m will be spent to reduce traffic pinch points
- - £390m allocated for the development of low emission vehicles and the development of connected autonomous vehicles
- - £80 million to install more charging points for ultra-low emission vehicles
- - £100 million invested in testing infrastructure for driverless cars
- - £150 million to provide at least 550 new electric and hydrogen buses, to reduce the emissions of 1,500 existing buses and to support taxis to become zero emission
- - £23bn to be spent on innovation and infrastructure over five years
- - £2bn per year by 2020 towards research and development funding
- - £110m for East West Rail and a commitment to deliver an Oxford to Cambridge Expressway
- - In excess of £1bn for digital infrastructure
- - £1.8bn from the Local Growth Fund to English regions
- - For businesses in rural areas with a population below 3,000, the Rural Rate Relief will increase to 100% on new fibre infrastructure
If you are a rural business owner and would like to discuss any of the changes noted above, contact our Agricultural Law specialist Graham Sutherland.
- - Doubling of UK exports funding capacity
- - £400m for venture capital funds through the British Business Bank to unlock £1bn in finance for growing firms.
For further information on how these changes may impact your business, contact our Commercial Business specialist Ian Fraser.