Philip Hammond delivered his first and last Autumn Statement yesterday as Chancellor of the Exchequer. All subsequent budgets following Spring 2017 will now be delivered in the autumn, starting next year. Thereafter, the OBR will produce a spring forecast to which the Government will respond making changes to fiscal policy required.
Although he’d taken advice from a number of economic and fiscal commentators, the Chancellor confirmed that the economy has largely confounded these authorities since the decision was made to leave the EU five months ago. The UK is forecast to be the fastest growing major economy in 2016, but the OBR has forecast growth will slow and inflation is set to rise over the next two years.
The Chancellor was keen to address the productivity gap in the UK. The UK lags behind the US, Germany, France and Italy. Various investment funds for innovation and infrastructure were announced with housing, transport and internet the focus of a new national productivity fund.
There were few tax announcements, but some of those mentioned included:
- National Insurance thresholds for both employers and employees National insurance will be aligned from April 2017. Employers and employees will start paying National Insurance on weekly earnings above £157 per week with no further cost to employees, but the maximum cost to a business will be an annual £7.18 per employee.
- Personal allowances are due to rise to £11,500 from 2017/18 and the Government remained committed to ensuring this increased to £12,500 by 2021.
- A letting ban on agents charging fees to renters is to be implemented which prevents letting agents from being able to enforce additional costs, for example, when they sign a new tenancy agreement.
- Corporation Tax will still fall to 17% by 2020.
- The National living wage and National minimum wage will increase from April 2017 for those aged 25 and over.
- Fuel duty will remain frozen for the seventh year.
- The newly introduced VAT flat rate scheme is to be strengthened and will only be available to businesses that can demonstrate that they are a ‘Limited cost trader’.
- 100% capital first year allowances will be available for new and unused electric charging points for electric vehicles, as part of a process for promoting the wider take up of such vehicles. This allowance will expire on 31 March 2019.
All in all a relatively quiet Autumn Statement, albeit one full of proposals yet to be implemented. If you would like any further details, click here to download a full copy of our Autumn Statement and Spending Review summary.