- Written by Holly Masters
The Chancellor of the Exchequer Philip Hammond has delivered his first Autumn Statement. Avoiding what he referred to as ‘‘rabbit out of hat’’ announcements, there have been comparatively few surprises.
The predominant surprise being that this will be the final Autumn Statement, and it will be replaced with an annual budget, from Autumn 2017 onward, followed by a Spring fiscal statement.
The Chancellor has advised that his priority is to ensure that Britain remains the number one destination for business.
We have summarised the key announcements and confirmations from today’s Autumn Statement as follows:
• Corporation tax will decrease to 17% from 2020 (the lowest rate of corporation tax in the G20)
• Business rates reduction package has been confirmed - transitional relief cap lowered, and there will be an increase of rural rate relief to 100% providing small businesses in rural areas a tax break
• Corporation tax loss relief - changes to rules with effect from April 2017
• Employers National Insurance Contributions on redundancy payments- If an employee is made redundant, the first £30,000 of termination payments will remain tax free, however from April 2018 termination payments over £30,000 which are already subject to income tax will also be subject to Employers National Insurance Contributions
• Capital allowances will be available at 100% on the installation on charging stations for electric cars
• Further investment in research and development
Individuals (including employees)
• The personal allowance will rise to £11,500 in April 2017, and to £12,500 by 2020, thereafter rises will be in line with CPI
• The point at which individuals will start paying the higher rate for tax will be increased to £50,000 by 2020, £45,000 from April 2017
• National insurance contributions for employees and employers will aligned to £157 per week from April 2017
• Class 2 NIC for the self-employed to be scrapped from April 2018, as previously announced
• Tax advantages for employees who previously benefitted from salary sacrifice services such as mobile phone salary sacrifice schemes will be removed. However, childcare, cycle to work and ultra-low emission car schemes will be unaffected, as will saving for your pension in this way
• Insurance premium tax to increase from 10 to 12% from June 2017
• National Living Wage will be raised to £7.50 from £7.20 from April 2017
• Universal Credit taper rate will be reduced from 65% to 63%
• New savings bond through NS&I with 2.2% interest rate over three years. Savers will be able to deposit up to £3,000. There will be more detail on this in the Budget next year
• Tax free childcare roll-out will begin in 2017, and will be kept under review to ensure it is "delivering the support it needs to working families". Mr Hammond has advised this would represent a saving of £2,000 per child.
• No fuel duty increase for the seventh successive year, saving motorists £130 a year
• A ‘‘triple lock’’ on the state pension will remain
• The annual allowance for those who have started to ‘‘draw down’’ their pension savings will be cut from £10,000 to £4,000
• The tax treatment of foreign pensions will align more with UK tax treatment rules (currently there are opportunities to extract money without paying UK tax)
• Tax advantages for employee shareholder schemes are to be reviewed
• The use of the flat rate scheme for businesses use is to be targeted- The government announced it will bring in "a new 16.5% rate from 1 April 2017 for businesses with limited costs, such as many labour-only businesses. This will help level the playing field, while maintaining the accounting simplification for the small businesses that use the scheme as intended."
• Letting agent’s fees charged to tenants are to be banned. This will result in letting agents charging the landlords costs for services such as credit and immigration checks
• The Help to Buy ‘‘equity loan’’ and the Help to Buy ISA will remain in force
• Right-to-buy for housing association tenants
• Working families will be eligible for 30 hours a week of free childcare for all 3 and 4 year olds from September 2017
• No further welfare savings measures
Should you require any further details, please do not hesitate to contact a member of the Spirare team.