Today, the Chancellor of the Exchequer, Philip Hammond announced the 2016 Autumn Statement and Spending Review. We have taken the time to consider these announcements and have highlighted the key points below.
TAX
- Increase in Personal allowance to £11,500 from April 2017 and a promise to increase to £12,500 by end of this Parliament. Increases thereafter will be in line with inflation or possibly more if the Chancellor feels the economy can support it.
- Higher rate threshold to be £50,000 by the end of this Parliament.
- Tax savings on salary sacrifice and benefits in kind to be stopped, exceptions for ultra-low emission cars, pensions, childcare and cycling.
- Universal Credit Taper cut from 65% to 63% from April 2017.
- Employee and employer National Insurance thresholds to be equalised at £157 per week from April 2017.
- More penalties for tax avoidance including those who help to arrange.
- No change in Corporation Tax rates from those announced in the Spring.
SAVINGS
- New Government sponsored Savings Account through NS&I paying 2.2% Gross p.a. For 3 year investment with a limit of £3,000.
BUSINESS RATES
- Rural Rate Relief to be increased to 100%, giving small businesses a tax break of up to £2,900.
- More than £1 billion investment in digital infrastructure and 100% business rates relief on new fibre infrastructure.
OTHER
- Insurance Premium Tax up from 10% to 12% from next June.
- Plans to curb whiplash claims and enable motor premium reductions.
- Money Purchase pension Scheme Allowance limit £4,000 p.a from April 2017.
National Living Wage to Increase to £7.50 per hour from April. - £1.4bn for an extra 40,000 affordable homes.
- By 2020, £2bn per year to be allocated to research and development funding.
- Ban on upfront fees by letting agents as soon as possible.
- £400m into Venture Capital funds to unlock 1bn of investment.
- Funding for 2,500 more prison officers.
- Fuel Duty frozen for the seventh year in a row.
- A move to a full budget in the Autumn with a brief Spring statement to give Parliament more scrutiny of proposed legislation.
Philip Hunt, our Tax Consultant commented:
I thought the new Chancellor had quite a relaxed manner in the way he delivered what was rather a retraction of some parts of George Osborne’s previous budgets, but that was, of course, before Brexit. The return to surplus has – as anticipated – been sidelined and growth forecasts reduced.
During the course of his speech, I thought the Chancellor showed a quick wit, able to deal with the odd heckle in a humorous way, I also enjoyed the way in which he announced the £7.6m for repairs to Wentworth Woodhouse, near Rotherham. The Chancellor commented that Wentworth Woodhouse was almost devastated by open cast mining supported by the Labour party; an announcement the Chancellor made clearly with Pride, to be able to do so, and Prejudice that the opposition had not recognised the importance of the building when they were in power.
