Autumn Statement 2016: Key Announcements
Chancellor pledges a post-Brexit economy ‘that works for everyone’
The new Chancellor of the Exchequer, Philip Hammond, acknowledged ‘sharp challenges ahead’ for the economy as he presented his first fiscal statement exactly five months after the UK’s historic vote to leave the European Union.
The latest forecasts from the Office for Budget Responsibility (OBR) confirmed an increase in borrowing, now expected to reach £68.2bn this year. Economic growth is expected to slow over the next two years, initially rising marginally to 2.1% for 2016, then reducing to 1.4% in 2017. Overall, the ‘Brexit effect’ is expected to impact on economic growth to the tune of 2.4%.
Summary on Economy & Spending:
Slower growth, higher inflation, weaker tax receipts, higher borrowing
- Income tax threshold to be raised from £11,000 to £11,500 in April, with the government still committed to taking the allowance up to £12,500 by 2020
- 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
- Corporation tax (currently 20%) will fall to 17% by 2020
- £400m into venture capital funds through the British Business Bank to unlock £1bn in finance for growing firms (“to tackle the longstanding problem of our fastest growing technology firms being snapped up by bigger companies”)
- Rural rate relief will increase from 50% to 100%, giving businesses in rural areas a boost
- There will be an additional £4.7bn in R&D funding by 2021, including an increase in grant funding to Innovate UK
- Ban on upfront fees charged by letting agents in England “as soon as possible”
- Additional £1.4bn to provide 40,000 new affordable homes, with a further £1.7bn to be used to acceleration the construction of new homes on public sector land
- New penalty for any person who has enabled another person/business to use a tax avoidance arrangement that is later defeated by HMRC
In a final flourish, and marking a major change to policy-making processes, the Chancellor announced that his first Autumn Statement would also be his last. 2017 will see the final Spring Budget, as from that point, the main Budget will be held in the Autumn. The OBR will produce a Spring forecast from 2018, with the Chancellor responding in a new Spring Statement.
You can read further insight and analysis in our Autumn Statement report.
For advice on any of the topics covered in the Autumn Statement, and how they may have an impact on your business or personal finances, please get in touch with us on 01903 234094.