23 November 2016
There was a fair amount of pressure on our new Chancellor, whose nickname was shared on yesterday’s Newsnight, ahead of today’s speech to act as a stable force in the post Brexit uncertainty and to adopt a stance of Chancellorship leaning toward a single annual fiscal event. Well, he’s certainly done that. Nearly an hour at the dispatch box and hardly anything said, other than a shake up to move future Budgets to the Autumn and to convert the Spring speech to an update event where major announcements will not ordinarily be made.
HM Treasury have published “25 things you need to know about the AS” and that’s a reasonable precis of the speech itself. And of course, he didn’t get through the whole talk without announcing any policies at all, so here we go:
Perceived avoidance clampdowns
As widely anticipated, clamp-downs were announced on:
- Salary sacrifice arrangements other than pensions, childcare, cycle to work and electric cars. Effective Apr-17 but with some transitional rules for longstanding arrangements
- Abusive use of the Employee Shareholder Status, introduced only a couple of years ago, and largely only being used in tax planning by the well off
- Inappropriate use of the VAT flat rate scheme
It’s fairly hard to see why government are so offended by these. They are all Government introduced incentives of one kind or another, and there’s no suggestion that people are deviating from the rules. Just that HMRC no longer like the fact that they may be achieving a kinder tax outcome by using the schemes.
Rates and thresholds
It’s largely business as usual here:
- Business tax road map from March will be maintained, with Corporation Tax at 17% by 2020
- Personal allowance to keep increasing, targeted to be £12,500 by 2021
- Higher rate tax threshold targeted at £50,000 by the same date
This really continues the theme set by George Osborne in raising rates and thresholds, and announcing increases over the life of Parliament.
In the same vein, there is a modest rise in the living wage to £7.50 by Apr-17, and a softening of the Universal Credit withdrawal proposals.
Buy to let
There was no mention in the speech of the pre-statement suggestion that banks were to begin restricting the lending criteria for buy to lets. But there will be an imminent ban on letting agent fees charged to tenants, and it seems certain the mortgage interest relief restrictions will go ahead as planned in Apr-17, so no let up for property landlords.
Insurance Premium Tax sees another hike, from 10% to 12% in June 2017. It wasn’t that long ago this was only 5%, and it must now have become a serious fundraiser and stealth tax for the government.
And there’s a 100% first year capital allowance for installing electric car charging points, probably mainly of interest to motorway service stations.
Perhaps most noteworthy of all though is what wasn’t said, at least not directly:
- Not a single word on Making Tax Digital, which our Chancellor was keen to bring forward the legislation for in Finance Bill 2017. Looks like we’ll have to wait and see what’s going to happen there then.
- Personal service companies could be in for a rough(er) time – couple the VAT flat rate attack with his reference to falling tax revenues from continuing incorporations and more rhetoric on disguised earnings, and it seems likely that there will be further attempts to seek to tax the whole world under PAYE, possibly with further changes to dividend taxation or even small company tax transparency, which the Office of Tax Simplification recently advised against.
We will be issuing our full summary of the Autumn Statement tomorrow. If you would like a copy of this please email: firstname.lastname@example.org or visit our website again tomorrow. In the meantime, if you would like further information on this blog please feel free to contact myself or your local UHY tax expert.