10 Dec Autumn Statement 2016 from Abbey+

Autumn Statement

Please find a short overview of the Autumn Statement from our partners, AbbeyTax.

The central theme of the final Autumn Statement was the announcement of a new National Productivity Investment Fund, set up to deliver £23bn of investment in housing, infrastructure, research and development and science and innovation over the next five years.

Several taxation pledges were reaffirmed and further measures to address tax evasion and avoidance announced.

R&D Tax Claims

The government has announced a review of 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. Please be aware that this announcement makes no difference to current claims, and further detail on the review will be announced in the new year

Tax and duty

The personal allowance will be increased to £11,500 in 2017/18 as previously announced and up to £12,500 before the end of the Parliament.

The higher rate tax threshold will rise to £45,000 in 2017/18 and up to £50,000 by the end of this Parliament.

Corporation tax will still be cut to 17% by 2020.

Tax savings under salary sacrifice schemes will be removed from April 2017, with the exception of ultra-low emission cars, pensions, childcare and Cycle to Work.

The National Living Wage will go up from £7.20 an hour to £7.50 an hour from April 2017.

Employee and employer National Insurance thresholds will be brought in line at £157 per week from April 2017.

Insurance premium tax will climb to 12% from the current 10% next June.

Fuel duty will remain frozen for the seventh successive year.

A new VAT rate of 16.5% will be introduced from 1 April 2017 for businesses with limited costs, such as many labour-only businesses, to tackle abuse of the Flat Rate Scheme.

Growth and inflation

The forecast for 2017 is now 1.4% in 2017, 1.7% in 2018 and 2.1% in both 2019 and 2020.

CPI inflation is forecast at 2.3% in 2017, 2.5% in 2018, 2.1% in 2019 and 2% in 2020

Making Tax Digital

The Government intends to publish its response to the Making Tax Digital consultations in January 2017.

Avoidance and Evasion

Legislation is going to extend HMRC’s data gathering powers to money service businesses.

The government is considering whether to make access to licences or services for businesses conditional upon them being registered for tax.

The government is going to 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.

As previously announced at Budget 2016, the government is going to 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. The defence of having relied on non-independent advice as taking ‘reasonable care’ is going to be removed, when considering penalties.

The government is investing further in HMRC to increase its activity on counter avoidance and litigation, to bring forward over £450m in revenue by 2021/22.

 

Richard Heath
Richard Heath
richardheath@cmfed.co.uk