The Chancellor, Philip Hammond, delivered his first Autumn Statement on Wednesday 23rd November 2016.
The first observation from the new Chancellor’s speech was that this would be the final Autumn Statement as we currently know it – his first and last Autumn Statement. The Spring 2017 Budget will be the final Budget to be held at that time which will be followed by the new annual Autumn Budget in 2017. Going forward there will be a Spring Statement but this is not intended to be significant from a tax perspective.
Given the current economic and political landscape it is perhaps not surprising that there were not many significant changes. Perhaps the new Chancellor will await his first full Budget in the Spring of 2017 before introducing more wide spread changes.
Click here to read a full summary of the Chancellor’s announcement.
Some of the key announcements have been summarised below:
The Government has maintained its commitment to increasing the personal allowance to £12,500 by the end of this parliamentary term and the planned increase to £11,500 from 6th April 2017 will go ahead. There were similar incremental increases across a number of allowances and thresholds in support of this aim.
The ISA limits saw a relatively large increase to £20,000 (as previously announced), with Junior ISA’s and Child Trust funds moving more modestly to £4,128 per annum.
Some of the more significant changes will impact employees. Salary sacrifice schemes, other than those offering pensions, pensions advice, childcare, cycle to work or ultra-low emission cars, will be taxed in the same way from April 2017. Arrangements in place before April 2017 will be protected for one year, and arrangements in place before April 2017 in relation to cars, accommodation and school fees will be protected for four years.
In response to perceived abuse, the Chancellor announced the abolition of shares acquired under the employee shareholder status rules. The reliefs will no longer be available for shares acquired on or after 1st December 2016. However, to benefit from relief between now and 1st December you must have been in receipt of independent advice prior to 13:30 hours on 23rd November 2016, in which case, provided the shares are acquired before 2nd December, relief will apply as before.
In general the Government’s commitment to reducing the headline Corporation Tax rate to 17% will be maintained.
The Chancellor announced a new capital allowances first year allowance of 100% for expenditure by businesses on the acquisition of new or used electric charge points.
This measure is effective immediately and will expire on 31st March 2019 for Corporation Tax purposes or 5th April 2019 for Income Tax purposes.
Following consultation, the Government will legislate to clarify the position in relation to the tax position on partnership profits and how they are shared. This is intended to ensure partnership profits are taxed fairly. Legislation will be published for technical consultation in due course.