Autumn Statement 2016
Philip Hammond, the Chancellor of the Exchequer, delivered his first and the last Autumn Statement on 23 November 2016. We can look forward to the Budget in the Autumn and a Spring Statement in future!
Delivered at a time of political uncertainty following the Brexit vote, the Chancellor declared that his Statement would be “focused on preparing and supporting the economy as we begin writing a new chapter in our country’s history”. At £68.2bn, forecast debt for 2016 is higher than previously thought, but three new fiscal rules have been announced in a new draft Charter for Budget Responsibility:
- public finances should be returned to balance as early as possible in the next Parliament, and cyclically-adjusted borrowing should be below 2% by the end of this Parliament;
- public sector net debt as a share of GDP must be falling by the end of this Parliament; and
- welfare spending must be within a cap, set by the Government and monitored by the Office of Budget Responsibility.
The Chancellor plans to prioritise investment in infrastructure and innovation, has announced an increase in the National Living Wage from April 2017 and a pledge to increase the Personal Allowance to £12,500 by the end of this Parliament.
However, with lower than expected tax receipts, the tax and National Insurance advantages of many salary sacrifice schemes are to be abolished, Insurance Premium Tax is to increase to 12% from June 2017 and the proposed restriction of relief for the interest expense of corporates has been confirmed.
We can expect further anti-avoidance measures too, with a consultation on self-employment status and the advantages of incorporation and a new rate for businesses with limited costs using the Flat Rate VAT scheme.
We expect more with the publication of the Finance Bill on 5 December 2016.
Katharine Arthur, Head of Tax at haysmacintyre
T 020 7969 5610 E firstname.lastname@example.org