An innovative statement for everyone
In his first – and last – Autumn Statement, the Chancellor emphasised the need for targeted investment in infrastructure and innovation to create a resilient “country that works for everyone”.
Against a backdrop of a lower growth forecast, a lower than expected tax take for this year and post-referendum uncertainty, Philip Hammond confirmed a delay in balancing the books and the desire to support the economy. To ensure Britain’s resilience, the Government will invest in infrastructure – particularly in road, rail, innovation and home-building – all designed to address the UK’s low productivity.
He declared his priority as Chancellor as being “to ensure that Britain remains the number one destination for business”. He confirmed the business tax roadmap set out in the March 2016 Budget, with corporation tax falling to 17% – the lowest corporate rate in the G20. He also evidenced his support for business by, for example, promising £2bn per year by 2020 for research and development funding.
Hammond was particularly keen to help lower income families, through measures such as an increase in the tax free personal allowance to £11,500 from April, an increase in the National Living Wage, cancellation of the fuel duty rise for another year, and a reduction in the universal credit taper rate.
The Government needs to maintain tax revenues, however, and Hammond plans to do this in a number of ways. For example, insurance premium tax is going up, rules on salary sacrifice schemes are being tightened, employee and employer national insurance thresholds are being aligned, and new tax relief restrictions will ensure that businesses pay tax in years when they make substantial profits. The Government is also alert to new threats to the tax base, and will be looking at a number of issues considered later in this newsletter.
This autumn’s rabbit out of the hat was of a different breed – no surprise tax measure, but the news that this would be the last Autumn Statement. Instead we are to have Spring Statements from 2018 (with no major tax measures) and Autumn Budgets, a switch designed to allow sufficient time for proposed tax changes to be scrutinised before they come in.