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We’ve all read the press around the Autumn Statement but as the Chancellor stood up there was mounting speculation as to whether he would deliver a speech helping those families who are “Just About Managing”.
What he has delivered was a rather upbeat assessment of the economy, compared to other countries’, especially given that the OBR predicts that growth will be 2.4% lower than it expected over the next five years, following the Brexit vote. Growth will slow to 1.4% in 2017 before it starts to rise to 1.7% in 2018, 2.1% in 2019 and 2020 before falling slightly to 2.0% in 2021. One announcement that was expected is that the country will not be running a surplus in 2019-20 but will, in fact, borrow during that year and going forward into the next parliament.
From a tax perspective he confirmed his intention to work towards the higher personal allowances set previously, of £12,500, before individuals start to pay tax at 20% and £50,000 before they hit the higher rate tax, which remains at 40%, by 2020. There were changes to the salary sacrifice rules to ensure they are taxed the same as salary although the main benefits that employees use, such as pensions and child care costs, remain untouched. The National Living Wage received a boost, increasing to £7.50 from £7.20 from April 17 and spending on enforcement will increase.
From a business point of view the Chancellor again confirmed that the reduction in the rates of corporate tax will be introduced, as planned. He recognised that production was a problem for the country and so is introducing a National Productivity Investment Fund, worth 23 Bn, that will target four areas: housing, transport, digital communications and research and development.
He made no changes to Inheritance Tax or to Capital Gains Tax except to abolish the exemption which had previously been introduced for those employees who invested in Employee Shareholder Status (ESS), only introduced in 2013. He also sought to tackle VAT flat rate avoidance by changing the scheme for those in the service industry, although this could see many leaving the scheme as they may be worse off when the changes come in to force on the 1st April next.
This Autumn Statement was perhaps not jam packed with new and exciting announcements but really charted a course, in uncertain waters, that was broadly more of the same. It will bring some help to those families who are just about managing but they and businesses will need to look towards future budgets, when times are more certain, before they can expect and real help. Perhaps the most exciting statement, for those of us who are tax geeks, is that the Spring Budget, that I have grown up with, will become an Autumn Budget and the Autumn Statement will become a Spring Statement, so that everything is turned on its head and which seems to mean two tax budgets next year!
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