No surprises in last mini-Budget.
Byline: Richard Podd
IN the last ever Autumn Statement (to be replaced with an Autumn Budget from 2017/18), the key tax message was the intention to deliver a fair system while remaining attractive to business in a period of Brexit fuelled uncertainty.
The key themes are in line with expectations and previously announced policy. In a time of economic uncertainty, the Chancellor has decided that significant changes to policy will not benefit the recovery.
Helping the 'Just About Managing'? The Government will continue to deliver increases to the Personal Allowance (PS12,500 by 2020) with the Higher Rate threshold increasing to PS50,000. In a further move, the Minimum Wage will increase to PS7.50 per hour in April 2017, an increase of 30p.
Although an increase of more than 4%, the increase to the Government's "living wage" is still significantly lower than the Living Wage Foundation's analysis of what is required (PS8.45) to meet the cost of living. Further, there is no suggestion that the Government will address the 'Gig Economy' to ensure that such workers can fully benefit.
The Government has also announced changes for employees by withdrawing salary sacrifice. However, the change is less extensive than feared, with pensions, ultra-low emission vehicles, cycle to work and childcare unaffected.
Motorists will be pleased to learn that fuel duty has again been frozen. Whilst the Chancellor portrayed this as a tax reduction, not increasing duty just means that prices will not go up, so motorists will not feel better next time they are at the pumps.
Motorists and households will be disappointed to learn that insurance premium tax is to increase from 10% to 12%. The groups hardest hit by this include those living in areas susceptible to flooding.
The Government has not announced flood defence improvements within the infrastructure spending. These people may rightly feel betrayed by the increase, particularly given the flooding earlier this week following Storm Angus and the likely impact on insurance premiums.
Fit for Business? As well as changes at home, there are also several changes to business taxes.
The Chancellor has not tried to compete with the promises of President Elect Trump to slash US tax corporation tax rates to 15%. Instead, there is confirmation of the previous promise to reduce rates from the current 20% to 17% by 2020.
It was also confirmed that the significant changes to relief for interest costs and fundamental changes to loss relief rules - which will ensure that large companies making significant profits will always pay some tax - will be enacted from April 2017.
The Government has also announced some measures to business rates to give a slight improvement. However, the widespread review of business rates requested by many has gone unaddressed.
In Summary Overall, there is nothing revolutionary in the Autumn Statement from a tax perspective, which is not too surprising given the constraints that Government find themselves in.
The UK's international competitiveness - so vital in the coming years post Brexit - has been steadily developed over the last decade and hence there was no need for fundamental reform.
Richard Podd, director PWC
Richard Podd, a tax director in Newcastle
|Printer friendly Cite/link Email Feedback|
|Publication:||The Journal (Newcastle, England)|
|Date:||Nov 24, 2016|
|Previous Article:||Disappointment as airport tax pledge quietly shelved.|
|Next Article:||Is this a vision for Britain's post-Brexit growth?|