Spending Review & Autumn Statement 2016Spending Review & Autumn Statement 2016
Chancellor Philip Hammond presented his first (and last) Spending Review and Autumn Statement to the House of Commons on 23 November 2016, alongside the publication of the Office for Budget Responsibility’s updated forecasts for growth and borrowing.
The following is a summary of the key announcements;
- OBR growth forecast 2.1% in 2016, then 1.4% in 2017, then 1.7% in 2018, then 2.1% in 2019 - 2020 and 2% in 2021.
- OBR borrowing forecasts of £68.2bn for 2016/17, then £59bn in 2017/18, £46.5bn in 2018/19, £21.9bn in 2019/20 and £20.7bn in 2020/21
- Public spending this year to be 40% of GDP - down from 45% in 2010
- Debt will rise from 84.2% of GDP last year to 87.3% this year, peaking at 90.2% in 2017-18
- Government no longer seeking a budget surplus in 2019-20 and is committed to returning public finances to balance "as soon as practicable"
- Income tax threshold to be raised to £11,500 in April, from £11,000 now
- Higher rate income tax threshold to rise to £50,000 by the end of the Parliament
- Tax savings on salary sacrifice and benefits in kind to be stopped, with exceptions for ultra-low emission cars, pensions, childcare and cycling
- 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
- Insurance premium tax to rise from 10% to 12% next June
- Universal Credit taper rate to be cut from 65% to 63% from April at a cost of £700m
- £400m into venture capital funds through the British Business Bank to unlock £1bn in finance for growing firms
- Funding for 2,500 more prison officers
- Reforms to compensation for whiplash to cut the cost of motor insurance
- Promise to abolish Autumn Statement, with Budgets happening in the autumn from next year, along with "Spring Statement" from 2018
- Ban on upfront fees charged by letting agents in England "as soon as possible"
- £23bn to be spent on innovation and infrastructure over five years
- £2.3bn housing infrastructure fund to help provide 100,000 new homes in high-demand areas
- £1.4bn to deliver 40,000 extra affordable homes
- Fuel duty rise cancelled for seventh year in succession
- £1.1bn extra investment in English local transport networks
- £220m to reduce traffic pinch points
- £2bn per year by 2020 for research and development funding
- More than £1bn for digital infrastructure and 100% business rates relief on new fibre infrastructure
- £1.8bn from Local Growth Fund to English regions
- Rural Rate Relief to be increased to 100%, "giving small businesses a tax break worth up to £2,900"
About this reportThis report was written immediately after Philip Hammond delivered his speech and has been prepared from press releases and other documents. It is not intended to cover every aspect of the Budget but, instead, is designed to act as overview only. No liability is accepted for any action taken or refrained from in consequence of its contents. Advice should always be sought from a professional.
Income Tax & National Insurance
Personal allowance and higher rate threshold>The government will meet its commitment to raise the income tax personal allowance to £12,500 and the higher rate threshold to £50,000, by the end of this Parliament. Next year, the personal allowance will rise to £11,500 and the higher rate threshold to £45,000. Once the personal allowance reaches £12,500, it will then rise in line with CPI as the higher rate threshold does, rather than in line with the NMW.
National Insurance thresholds
As recommended by the Office of Tax Simplification (OTS), the National Insurance secondary (employer) threshold and the National Insurance primary (employee) threshold will be aligned from April 2017, meaning that both employees and employers will start paying National Insurance on weekly earnings above £157. This will simplify the payment of National Insurance for employers.
Class 2 NICs
As announced at Budget 2016, Class 2 NICs will be abolished from April 2018, simplifying National Insurance for the self-employed. The Autumn Statement confirms that, following the abolition of Class 2 NICs, self-employed contributory benefit entitlement will be accessed through Class 3 and Class 4 NICs. All self-employed women will continue to be able to access the standard rate of Maternity Allowance. Self-employed people with profits below the Small Profits Limit will be able to access Contributory Employment and Support Allowance through Class 3 NICs. There will be provision to support self-employed individuals with low profits during the transition.
Removing National Insurance from the effects of the Limitation Act – From April 2018, the government will remove NICs from the effects of the Limitation Act 1980 and Northern Ireland equivalent. This will align the time limits and recovery process for enforcing National Insurance debts with other taxes. The government will consult on the details.
As announced at Budget 2016, from April 2018 termination payments over £30,000, which are subject to income tax, will also be subject to employer NICs. Following a technical consultation, tax will only be applied to the equivalent of an employee’s basic pay if their notice is not worked, making it simpler to apply the new rules. The government will monitor this change and address any further manipulation. The first £30,000 of a termination payment will remain exempt from income tax and National Insurance.
Off-payroll working rule
Following consultation, the government will reform the off-payroll working rules in the public sector from April 2017 by moving responsibility for operating them, and paying the correct tax, to the body paying the worker’s company.
From April 2017, all employees called to give evidence in court will no longer need to pay tax on legal support from their employer. This will help support all employees and ensure fairness in the tax system, as currently only those requiring legal support because of allegations against them can use the tax relief.
The taxation of different forms of remuneration
Employers can choose to remunerate their employees in a range of different ways in addition to a cash salary. The tax system treats these different forms of remuneration inconsistently and sometimes more generously. The government will therefore consider how the system could be made fairer between workers carrying out the same work under different arrangements and will look specifically at how the taxation of benefits in kind and expenses could be made fairer and more coherent. The government will take the following action:
- Salary sacrifice – following consultation, the tax and employer National Insurance advantages of salary sacrifice schemes will be removed from April 2017, except for arrangements relating to pensions (including advice), childcare, Cycle to Work and ultra-low emission cars. This will mean that employees swapping salary for benefits will pay the same tax as the vast majority of individuals who buy them out of their post-tax income. Arrangements in place before April 2017 will be protected until April 2018, and arrangements for cars, accommodation and school fees will be protected until April 2021.
- Valuation of benefits in kind – the government will consider how benefits in kind are valued for tax purposes, publishing a consultation on employer-provided living accommodation and a call for evidence on the valuation of all other benefits in kind at Budget 2017.
- Employee business expenses – the government will publish a call for evidence at Budget 2017 on the use of the income tax relief for employees’ business expenses, including those that are not reimbursed by their employer
New tax allowance for property and trading income
As announced at Budget 2016, the government will create two new income tax allowances of £1,000 each, for trading and property income. Individuals with trading income or property income below the level of the allowance will no longer need to declare or pay tax on that income. The trading income allowance will now also apply to certain miscellaneous income from providing assets or services.
National Living Wage and National Minimum Wage rates
Following the recommendations of the independent Low Pay Commission, the government will increase the National Living Wage (NLW) by 4.2% from £7.20 to £7.50 from April 2017. The government will also accept all of their recommendations for the other NMW rates (which were last increased in October 2016) to apply from April 2017, including:
- increase the rate for 21 to 24 year olds from £6.95 to £7.05 per hour
- increase the rate for 18 to 20 year olds from £5.55 to £5.60 per hour
- increase the rate for 16 to 17 year olds from £4.00 to £4.05 per hour
- increase the rate for apprentices from £3.40 to £3.50 per hour
National Minimum Wage enforcement
The government will invest an additional £4.3 million per year to strengthen NMW enforcement. This will fund new HM Revenue and Customs teams to proactively review those employers considered most at risk of non-compliance with the NMW. The government will also provide additional support targeted at small businesses to help them to comply; and a campaign aimed at raising awareness amongst workers and employers of their rights and responsibilities.
Savings & Pensions
As previously announced, the government will continue to support saving by increasing the ISA limit from £15,240 to £20,000 in April 2017.
Starting rate for savings
The band of savings income that is subject to the 0% starting rate will remain at its current level of £5,000 for 2017-18.
Money Purchase Annual Allowance
The Money Purchase Annual Allowance will be reduced to £4,000 from April 2017. The government does not consider that earners aged 55 and over should be able to enjoy double pension tax relief, such as relief on recycled pension savings, but does wish to offer scope for those who have needed to access their savings to subsequently rebuild them. The government will consult on the detail.
The tax treatment of foreign pensions will be more closely aligned with the UK’s domestic pension tax regime by bringing foreign pensions and lump sums fully into tax for UK residents, to the same extent as domestic ones. The government will also close specialist pension schemes for those employed abroad (“section 615” schemes) to new saving, extend from 5 to 10 years the taxing rights over recently emigrated non-UK residents’ foreign lump sum payments from funds that have had UK tax relief, align the tax treatment of funds transferred between registered pension schemes, and update the eligibility criteria for foreign schemes to qualify as overseas pensions schemes for tax purposes.
The government will shortly publish a consultation on options to tackle pension scams, including banning cold calling in relation to pensions, giving firms greater powers to block suspicious transfers and making it harder for scammers to abuse ‘small self-administered schemes’.
Universal Credit taper
Universal Credit ensures that work always pays. Under the legacy welfare system, individuals at certain income levels would not be financially incentivised to work an additional hour, but Universal Credit operates a constant withdrawal rate on net earnings – the taper rate. The current rate of 65% means that once claimants earn above the work allowances in Universal Credit, their income will be withdrawn at a rate of 65 pence for every extra £1 earned. From April 2017, the taper rate that applies in Universal Credit will be reduced from 65% to 63%. This will let individuals keep more of what they earn and strengthen the incentive for individuals to progress in work.
Universal Credit roll out
The Autumn Statement provides funding for the welfare announcement made by the Secretary of State for the Department for Work and Pensions (DWP) on 20 July 2016, which included policy changes and revisions to the Universal Credit roll out schedule.
Support for refugees
Refugees and their family members will be exempted from the Past Presence Test, meaning that they will no longer have to be resident in the UK for 2 years before they can receive disability benefits.
Local Housing Allowance (LHA) rates in social housing
Tthe implementation of the cap on Housing Benefit and LHA rates in the social rented sector will be delayed by 1 year, to April 2019. The cap will be applied to all supported housing tenancies from April 2019, and the government will provide additional funding to Local Authorities, so that they can meet the additional costs of supported housing in their area. For general needs housing, the cap will now apply from April 2019 for all tenants on Universal Credit, and to Housing Benefit tenants whose tenancies began or were renewed since April 2016.
Social rent downrating
Rrefuges, almshouses, Community Land Trusts and co-operatives will be exempt from the policy to reduce social sector rents by 1% a year for 4 years from 2016-17 (4)
Personal Independence Payment (PIP)
The Autumn Statement accounts for the government’s previously announced decision not to go ahead with changes proposed at Budget 2016 to PIP.
Pay to Stay
As announced by DCLG on 21 November 2016, the government has decided not to implement Pay to Stay, under which local authority tenants with taxable incomes over £31,000 (or £40,000 in London) would have been required to pay a market, or near market, rent. The government will work to deliver its commitment to ensure that social housing is occupied by those who need it most through other measures.
HMRC will allow new Tax Credit claims to be made using digital devices from April 2017.
Child Tax Credit
HMRC will make in-year award adjustments so the disability elements of Child Tax Credit will be paid to a group of recipients who are eligible, but not currently receiving this entitlement.
Capital Gains Tax
Employee Shareholder Status (ESS)
The tax advantages linked to shares awarded under ESS will be abolished for arrangements entered into on, or after, 1 December 2016. The status itself will be closed to new arrangements at the next legislative opportunity. This is in response to evidence suggesting that the status is primarily being used for tax planning instead of supporting a more flexible workforce.
UK taxpayers invested in offshore reporting funds pay tax on their share of a fund’s reportable income, and Capital Gains Tax (CGT) on any gain on disposal of their shares or units. The government will legislate to ensure that performance fees incurred by such funds, and which are calculated by reference to any increase in the fund’s value, are not deductible against reportable income from April 2017 and instead reduce any tax payable on disposal gains. This equalises the tax treatment between onshore and offshore funds.
Tax deductibility of corporate interest expense
Following consultation, the government will introduce rules that limit the tax deductions that large groups can claim for their UK interest expenses from April 2017. These rules will limit deductions where a group has net interest expenses of more than £2 million, net interest expenses exceed 30% of UK taxable earnings and the group’s net interest to earnings ratio in the UK exceeds that of the worldwide group. The government will widen the provisions proposed to protect investment in public benefit infrastructure. Banking and insurance groups will be subject to the rules in the same way as groups in other industry sectors.
Reform of loss relief
Following consultation, the government will legislate for reforms announced at Budget 2016 that will restrict the amount of profit that can be offset by carried-forward losses to 50% from April 2017, while allowing greater flexibility over the types of profit that can be relieved by losses incurred after that date. The restriction will be subject to a £5 million allowance for each standalone company or group. In implementing the reforms the government will take steps to address unintended consequences and simplify the administration of the new rules. The amount of profit that banks can offset with losses incurred prior to April 2015 will continue to be restricted to 25% in recognition of the exceptional nature and scale of losses in the sector.
Bringing non-resident companies’ UK income into the corporation tax regime
The government is considering bringing all non-resident companies receiving taxable income from the UK into the corporation tax regime. At Budget 2017, the government will consult on the case and options for implementing this change. The government wants to deliver equal tax treatment to ensure that all companies are subject to the rules which apply generally for the purposes of corporation tax, including the limitation of corporate interest expense deductibility and loss relief rules.
Bank levy reform
As announced at Summer Budget 2015, the bank levy charge will be restricted to UK balance sheet liabilities from 1 January 2021. Following consultation, the government confirms that there will be an exemption for certain UK liabilities relating to the funding of non-UK companies and an exemption for UK liabilities relating to the funding of non-UK branches. Details will be set out in the government’s response to the consultation, with the intention of legislating in Finance Bill 2017-18. The government will continue to consider the balance between revenue and competitiveness with regard to bank taxation, taking into account the implications of the UK leaving the EU.
Substantial Shareholding Exemption (SSE) reform
Following consultation, the government will make changes to simplify the rules, remove the investing requirement within the SSE and provide a more comprehensive exemption for companies owned by qualifying institutional investors. The changes will take effect from April 2017.
Authorised investment funds: dividend distributions to corporate investors
The government will modernise the rules on the taxation of dividend distributions to corporate investors in a way which allows exempt investors, such as pension funds, to obtain credit for tax paid by authorised investment funds and will publish proposals in draft secondary legislation in early 2017.
Museums and galleries tax relief
The government will broaden the scope of the museums and galleries tax relief announced at Budget 2016 to include permanent exhibitions so that it is accessible to a wider range of institutions across the country. The rates of relief will be set at 25% for touring exhibitions and 20% for non-touring exhibitions and the relief will be capped at £500,000 of qualifying expenditure per exhibition. The relief will take effect from 1 April 2017, with a sunset clause which means the relief will expire in April 2022 if not renewed. In 2020, the government will review the tax relief and set out plans beyond 2022.
Reforms to the taxation of non-domiciled individuals
Individuals who live in the UK and make use of public services should pay their fair share of tax. The following reforms to the taxation of non-domiciled individuals make the tax system fairer for everybody:
- as previously announced, the government will end the permanency of non-domiciled tax status. From April 2017, non-domiciled individuals will be deemed UK-domiciled for tax purposes if they have been UK resident for 15 of the past 20 years, or if they were born in the UK with a UK domicile of origin. As previously announced, non-domiciled individuals who have a non-UK resident trust set up before they become deemed-domiciled in the UK will not be taxed on income and gains arising outside the UK and retained in the trust
- from April 2017, inheritance tax will be charged on UK residential property when it is held indirectly by a non-domiciled individual through an offshore structure, such as a company or a trust. This closes a loophole that has been used by non-domiciled individuals to avoid paying inheritance tax on their UK residential property
- the government will change the rules for the Business Investment Relief (BIR) scheme from April 2017 to make it easier for non-domiciled individuals who are taxed on the remittance basis to bring offshore money into the UK for the purpose of investing in UK businesses. The government will continue to consider further improvements to the rules for the scheme to attract more capital investment in British businesses by non-domiciled individuals
National Productivity Investment Fund
The Autumn Statement announces a new NPIF which will be targeted at 4 areas that are critical for improving productivity: housing, transport, digital communications, and research and development (R&D).
The NPIF will provide for £23 billion of spending between 2017-18 and 2021-22, taking the the total spending on housing, economic infrastructure, and R&D to £170 billion over the next 5 years.
The government will publish a Housing White Paper shortly, setting out a comprehensive package of reform to increase housing supply. To help deliver this, the Autumn Statement announces:
Housing Infrastructure Fund – a new Housing Infrastructure Fund of £2.3 billion by 2020-21, funded by the NPIF and allocated to local government on a competitive basis, will provide infrastructure targeted at unlocking new private house building in the areas where housing need is greatest. This will deliver up to 100,000 new homes. The government will also examine options to ensure that other government transport funding better supports housing growth (8)
Affordable homes – the government will relax restrictions on grant funding to allow providers to deliver a mix of homes for affordable rent and low cost ownership, to meet the housing needs of people in different circumstances and at different stages of their lives. The NPIF will provide an additional £1.4 billion to deliver an additional 40,000 housing starts by 2020-21 (8)
Accelerated construction – In early October, the government announced that it would pilot accelerated construction on public sector land, backed by up to £2 billion of funding. To meet this commitment, the government will invest £1.7 billion by 2020-21 through the NPIF to speed up house building on public sector land in England through partnerships with private sector developers. The devolved administrations will receive funding through the Barnett formula in the usual way. (8)
Right to Buy – The government will fund a large-scale regional pilot of the Right to Buy for housing association tenants. Over 3,000 tenants will be able to buy their own home with Right to Buy discounts under the pilot. (16)
Roads and local transport – The NPIF will provide an additional £1.1 billion by 2020‑21 in new funding to relieve congestion and deliver much-needed upgrades on local roads and public transport networks. On strategic roads, an extra £220 million will be invested to tackle key pinch-points. The government will recommit to the National Roads Fund announced at Summer Budget 2015.
Future transport – The NPIF will invest a further £390 million by 2020-21 to support ultra-low emission vehicles (ULEVs), renewable fuels, and connected and autonomous vehicles (CAVs). This includes £80 million for ULEV charging infrastructure, £150 million in support for low emission buses and taxis, £20 million for the development of alternative aviation and heavy goods vehicle fuels, and £100 million for new UK CAV testing infrastructure. In addition to the tax incentives for ULEVs in company tax and salary schemes set out in the tax chapter, from today to the end of March 2019 the government will also offer 100% first-year allowances to companies investing in charge-points for electric vehicles.
Rail: capacity and smart ticketing – From 2018-19 to 2020-21, the NPIF will allocate an additional £450 million to trial digital signalling technology, to expand capacity, and improve reliability. Around £80 million will be allocated to accelerate the roll out of smart ticketing including season tickets for commuters in the UK’s major cities. Construction of High Speed 2 Phase 1 will start next year, the government has announced its preferred route for Phase 2b of High Speed 2,15 and is looking forward to receiving a business case for Crossrail 2. The government is also investing £5 million in development funding for the Midlands Rail Hub, a programme of rail upgrades in and around central Birmingham that could provide up to 10 additional trains per hour.
The government will invest over £1 billion by 2020-21, including £740 million through the NPIF, targeted at supporting the market to roll out full-fibre connections and future 5G communications. This will be delivered through:
- £400 million for a new Digital Infrastructure Investment Fund, at least matched by private finance, to invest in new fibre networks over the next 4 years, helping to boost market ambitions to deploy full-fibre access to millions more premises by 2020
- A new 100% business rates relief for new full-fibre infrastructure for a 5 year period from 1 April 2017; this is designed to support roll out to more homes and businesses.
- Providing funding to local areas to support investment in a much bigger fibre ‘spine’ across the UK, prioritising full-fibre connections for businesses and bringing together public sector demand. The government will work in partnership with local areas to deliver this, and a call for evidence on delivery approaches will be published shortly after the Autumn Statement.
- Providing funding for a coordinated programme of integrated fibre and 5G trials, to keep the UK at the forefront of the global 5G revolution; further detail will be set out at Budget 2017 as part of the government’s 5G Strategy.
Research and Development
To help boost UK productivity, the NPIF will provide an additional £4.7 billion by 2020-21 in R&D funding.
Industrial Strategy Challenge Fund – a new cross-disciplinary fund to support collaborations between business and the UK’s science base, which will set identifiable challenges for UK researchers to tackle. The fund will be managed by Innovate UK and research councils. Modelled on the USA’s Defense Advanced Research Projects Agency programme the challenge fund will cover a broad range of technologies, to be decided by an evidence-based process.
Innovation, applied science and research – additional funding will be allocated to increase research capacity and business innovation, to further support the UK’s world-leading research base and to unlock its full potential. Once established, UKRI will award funding on the basis of national excellence and will include a substantial increase in grant funding through Innovate UK.
R&D tax environment – To ensure the UK tax system is strongly pro-innovation, the government will review the tax environment for R&D to look at ways to build on the introduction of the ‘above the line’ R&D tax credit to make the UK an even more competitive place to do R&D.
Tech transfer and R&D facilities – In October the government committed an additional £100 million until 2020-21 to extend and enhance the Biomedical Catalyst. These funds will be allocated to Innovate UK. Funding of £100 million will also be provided until 2020-21 to incentivise university collaboration in tech transfer and in working with business, with the devolved administrations receiving funding through the Barnett formula in the usual way.
Science and Innovation Audits – The government has selected 8 areas for the second wave of Science and Innovation Audits: Bioeconomy of the North of England; East of England; Innovation South; Glasgow Economic Leadership; Leeds City Region; Liverpool City Region +; Offshore Energy Consortium; and Oxfordshire Transformative Technologies. The government is also announcing a further opportunity to apply to participate in a third wave of audits.
Anti Avoidance and Evasion
Disguised remuneration schemes
Budget 2016 announced changes to tackle use of disguised remuneration schemes by employers and employees. The government will now extend the scope of these changes to tackle the use of disguised remuneration avoidance schemes by the self-employed. This will ensure that self-employed users of these schemes pay their fair share of tax and National Insurance.
Further, the government will take steps to make it less attractive for employers to use disguised remuneration avoidance schemes, by denying tax relief for an employer’s contributions to disguised remuneration schemes unless tax and National Insurance are paid within a specified period.
Strengthening tax avoidance sanctions and deterrents
As signalled at Budget 2016, to provide a strong deterrent to those enabling tax avoidance, the government will introduce a new penalty for any person who has enabled another person or business to use a tax avoidance arrangement that is later defeated by HMRC. This new regime will reflect an extensive consultation and input from stakeholders and details will be published in draft legislation shortly. The government will also remove the defence of having relied on non-independent advice as taking ‘reasonable care’ when considering penalties for any person or business that uses such arrangements.
Tackling exploitation of the VAT relief on adapted cars for wheelchair users
The government will clarify the application of the VAT zero-rating for adapted motor vehicles to stop the abuse of this legislation, while continuing to provide help for disabled wheelchair users.
VAT Flat Rate Scheme
The government will introduce 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. Guidance which has the force of law, published today, will introduce anti-forestalling provisions.
Requirement to correct
The government will introduce a new legal requirement to correct a past failure to pay UK tax on offshore interests within a defined period of time, with new sanctions for those who fail to do so. (28)
Requirement to register offshore structures
The government will consult on a new legal requirement for intermediaries arranging complex structures for clients holding money offshore to notify HMRC of the structures and the related client lists.
Hidden economy and money service businesses
The government will legislate to extend HMRC’s data-gathering powers to money service businesses in order to identify those operating in the hidden economy. (29)
Tackling the hidden economy
Following consultation, the government will consider the case for making access to licences or services for businesses conditional on them being registered for tax. It will also develop proposals to strengthen sanctions for those who repeatedly and deliberately participate in the hidden economy. Budget 2017 will set out further details.
Business rates – To remove the inconsistency between rural rate relief and small business rate relief the government will double rural rate relief to 100% from 1 April 2017
Tax-advantaged investment schemes
Social Investment Tax Relief (SITR) – From 6 April 2017, the amount of investment social enterprises aged up to 7 years old can raise through SITR will increase to £1.5 million. Other changes will be made to ensure that the scheme is well targeted. Certain activities, including asset leasing and on-lending, will be excluded. Investment in nursing homes and residential care homes will be excluded initially, however the government intends to introduce an accreditation system to allow such investment to qualify for SITR in the future. The limit on full-time equivalent employees will be reduced to 250. The government will undertake a review of SITR within two years of its enlargement.
Energy & Transport Taxes
The fuel duty rate will remain frozen for the seventh successive year.
Company Car Tax (CCT) bands and rates for 2020-21 – To provide stronger incentives for the purchase of ULEVs, new, lower bands will be introduced for the lowest emitting cars. The appropriate percentage for cars emitting greater than 90g CO2/km will rise by 1 percentage point
Insurance Premium Tax (IPT)
The standard rate of IPT will rise to 12% from 1 June 2017. IPT is a tax on insurers and so any impact on premiums depends on insurers’ commercial decisions.
Letting agent fees
The government will ban letting agents’ fees to tenants, to improve competition in the private rental market and give renters greater clarity and control over what they will pay. The Department for Communities and Local Government (DCLG) will consult ahead of bringing forward legislation.
The Ministry of Justice is consulting on proposals which will reduce the unacceptably high number of whiplash claims and allow insurers to cut premiums. The government will bring forward supporting legislation in the Justice Bill and expects insurers to pass on savings which average around £40 for drivers in England and Wales.
What They Said
Philip Hammond | Chancellor of the Exchequer
"It is a privilege to report today on an economy which the IMF predicts will be the fastest growing major advanced economy in the world this year. An economy with employment at a record high – and unemployment at an 11 year low. An economy which, through the hard work of the British people, has bounced back from the depths of recession. And an economy which has confounded commentators at home and abroad with its strength and its resilience since the British people decided, exactly five months ago today, to leave the European Union and chart a new future for our country. That decision will change the course of Britain’s history.
We resolve today to confront those challenges head on. To prepare our country to seize the opportunities ahead. And in doing so, to build an economy that works for everyone…and where every corner of this United Kingdom is part of our national success."
John McDonnell | Shadow Chancellor
It has confirmed what we expected; six wasted years of austerity. Growth down. wages down. Productivity down. The government has missed it's target on tacking the deficit and reducing debt. And there was nothing in the Statement that gave any hope that we will be able to tackle Brexit successfully.
Adam Marshall | Director-General of the British Chambers of Commerce
"Philip Hammond has delivered a responsible, solid and focused package that will reassure both business and markets. Increased resources for local and regional transport infrastructure, broadband, housing and innovation will boost business confidence at a critical moment. The Chancellor's strong focus on the growth requirements of our cities, regions and nations will not go unnoticed in business communities across the UK. While business communities would have liked Philip Hammond to go even further to support growth, they will recognise that his hands are somewhat tied by lower tax receipts and sharply higher borrowing forecasts. The fact that he chose to commit significant new resources to support growth and productivity demonstrates welcome flexibility during a period of uncertainty and change. There was very little support in our business communities for further cuts to Corporation Tax, so Philip Hammond was right to stick with existing plans. However, we would have liked to see more action on the high up-front taxes and costs of doing business in the UK, particularly business rates. The government's decision to move to a single annual set of tax and spending commitments will be welcomed by businesses weary of frequent and sometimes unclear changes of direction.”
Carolyn Fairbairn | CBI Director General
“The Chancellor has prioritised a pragmatic down payment on future productivity growth. His emphasis on R&D, housing and local infrastructure will help businesses in all corners of the UK to invest with greater confidence for the long-term, during turbulent times. This will be warmly welcomed. These measures must now be translated into action. That means tarmac, tracks and telecoms being laid, and clear, deliverable timetables for major projects – only then will they act as a catalyst for investment, jobs and growth. Reducing the frequency of fiscal events along with the commitment to stick with the tax roadmap will provide stability for businesses. Importantly, the new fiscal rules provide the Government with welcome flexibility, while remaining prudent, in uncertain times. The Government is right to accept the independent Low Pay Commission recommendations, as firms want to see affordable rises in the minimum wage that protects the low paid and avoids damaging job prospects. The Chancellor should keep a watching brief on the challenges created by higher inflation and uncertainty weighing on near-term business investment.”
Frances O'Grady | TUC general secretary
“Today’s OBR forecast shows that the average annual wage will be £1,000 lower in 2020 than predicted at the Budget. And this is on top of wages still having not recovered to their 2007 levels. This is yet another blow to ordinary working people’s standard of living. And far from being focussed on ‘just about managing’ families, this shows up the government’s plans as inadequate. Home helps, firefighters and nurses are facing real terms pay cuts – but the Chancellor missed the opportunity to help them. The rise to the national minimum wage is welcome – but under-25s will still miss out on the full amount. And the partial restoration of major cuts to Universal Credit isn’t anywhere near the help ‘just about managing’ families need. These are political choices. The Chancellor has chosen tax cuts for corporations and the better-off, rather than putting money in the pockets of ordinary working people.Despite positive – if limited – announcements on bogus self-employment and funding for infrastructure, today’s Autumn Statement was an underwhelming package that does not do enough to support working people now or prepare for a prosperous future outside the EU.”
Simon Walker | Ddirector General of the Institute of Directors
“This was a sensible and sober Autumn Statement. The Chancellor’s attempts to increase productivity by investing in transport infrastructure, broadband and housing are welcome, but businesses would also have liked to have seen measures to encourage them to invest now. The OBR predicts that next year will be the low point for growth, so we are surprised that amidst all of the political and economic uncertainty there weren’t many measures to help ‘just managing’ businesses now. The Government will be borrowing heavily over the next few years, so it’s a shame that they couldn’t use more of the fiscal headroom to encourage investment through measures such as raising the Annual Investment Allowance, which could deliver productivity increases sooner. We weren’t expecting anything flashy today, and we didn’t get it, but that’s not necessarily a bad thing from the man in charge of the economy. Our members will welcome the fact that there will only be one Budget a year in future, as too much tinkering only makes the tax system more complex.”