By Chris Downing – Director.
The Last Autumn Statement (until it becomes the Autumn budget!)
Having looked back at our thoughts on the same statement last year, we were looking at a statement delivered by George Osborne with a view to becoming the next Prime Minister and the UK balancing its income and expenses by 2020…Now George is just a memory and talk of balancing the books is fading away, add in to the mix that Theresa May has said that Article 50 will be invoked in spring 2017, today was to give an insight as to how the Government saw the coming years.
Whilst the big economic picture is important, we were also hoping for a steer as to how the current chancellor would view the Entrepreneur as part of Britain’s economy. What would he do for business owners?
Below is the summary of the key points:
- The chancellor promises “fiscal headroom” to support the economy through Brexit
- Office for Budget Responsibility growth forecast upgraded to 2.1% in 2016, then downgraded to 1.4% in 2017 OBR forecasts growth of 1.7% in 2018, 2.1% in 2019 and 2020 and 2% in 2021
- Government no longer seeking a budget surplus in 2019-20 – Mr Hammond says he is committed to returning public finances to balance “as soon as practicable” – all timescales have now disappeared!!
- Debt will rise from 84.2% of GDP last year to 87.3% this year, peaking at 90.2% in 2017-18 – we still haven’t stopped borrowing…
- OBR forecasts borrowing of £68.2bn this year, then £59bn in 2017-18, £46.5bn in 2018-19, £21.9bn in 2019-20 and £20.7bn in 2020-21
- £23bn to be spent on innovation and infrastructure over five years
- £2bn per year by 2020 for research and development funding
- Departmental spending plans (AKA cuts) set out in 2015 Spending Review to remain in place
- There is going to be a consultation on whether people who run their business via a company are at an advantage over those who use a partnership. It appears this government will not rest until everyone running a company pays the same tax as though it was a partnership (potentially more tax…) and comes after the attack on dividend rates last year. We will keep our eyes peeled for announcements on this.
- Income tax threshold to be raised to £11,500 in April, from £11,000 now but this was previously announced. Higher rate income tax threshold to rise to £50,000 by the end of the Parliament remains a commitment.
- Tax savings on salary sacrifice and benefits in kind to be stopped, with exceptions for ultra-low emission cars, pensions, childcare and cycling. There is little guidance out on this yet.
- National Living Wage to rise from £7.20 an hour to £7.50 from April next year.
- Employee and employer National Insurance thresholds to be equalised at £157 per week from April 2017. This will cost employers £7.18 per year per the Chancellor.
- Insurance premium tax to rise from 10% to 12% next June – more rises to this tax from those seen recently.
- The budget is going to be taking place in March 2017, but thereafter, it will be an Autumn event announcing the changes which will take place in March/April.
- There will then be a ‘Spring Statement’ to comment on the economy but shouldn’t include many tax changes. This is to ensure we only have one set of rule changes per year (although he reserved the right to make any changes if needed..!).
- There was no announcement on the HMRC mission of ‘making tax digital’ which would require all businesses to report quarterly to HMRC as well as annually. It was expected this would be pushed back from its planned start date of 2017/18. We will keep you updated on this if anything happens.
Thank you for reading our summary and if you have any questions please get in touch.