Autumn Statement 2016
In his first and last Autumn statement, the Chancellor, Phillip Hammond, has significantly reduced the forecast for UK GDP growth to 1.4% in 2017 - this compares to 2.4% announced in the March 2016 budget. The forecast for the following years has also been cut to:
2018 - 1.7 %
2019 - 2.1%
2020 - 2.1%
Inflation is projected to rise to 2.7% in 2017: with weak sterling, people are likely to see a rise in prices.
Recognising the needs to address the UK's housing shortage, one of the big policy announcements centred on infrastructure with significant funding aimed at improving transport, digital communications and overall productivity of the economy. There are also plans to invest £1.4bn to delive 40,000 new affordable homes.
We have outlined below more changes and as ever, if you feel that any of these will impact on you, please contact one of our Wealth Planners.
Income tax personal allowance
The Government still intends to increase the personal allowances to £15,000 by April 2020 and the basic rate threshold to £50,000.
The personal allowance for 2017/18 will be £11,500 - effectively the limit before you have to start paying tax.
National Insurance contributions (NIC)
Employee and employer NIC thresholds will be aligned at £157 per week from April 2017.
Insurance premium tax
In November 2015 this tax was 6% and today is 10%. It will be going up again in June 2017 to 12%. This will impact all general insurances such as car and home insurance.
Money Purchase Annual Allowance (MPAA) slashed
The MPAA will reduce from £10,000pa to £4,000pa from April 2017. The Government has said this is to avoid people being able to benefit from double tax relief. So once someone over 55 accesses their money purchase pension - even if for just £1 - the new limit will apply.
ISAs and CTFs
From 6 April 2017 the annual subsctiption limit for Junior ISAs and Child Trust Funds will be uprated in line with the Consumer Prices Index (CPI) to £4,128. The ISA allowance will increase from £15,240 to £20,00.
Letting agent reform
Currently tenants are charged a fee by letting agents but this will be banned and the landlord will have to take responsibility for picking up this charge instead, as the person responsible for employing the agent. With the demand for rental property high at the moment, this should make the system fairer and help to make the existing market work more efficiently for the oeverall benefit of all parties involved.
Salary sacrifice and pensions
The Government is to axe salary sacrifice tax perks on a range of employee benefits such as health screening checks, company cars and mobile contract from 5 April 2017. However, if you are already in one of the schemes by the end of March 2017, you may be able to keep the tax benefits for up to 4 years. Pension contributions, childcare voucers and cycle-to-work schemes will NOT be affected.
Corporation tax rates
The Government has expressed their intention to lower the corporation tax rate to 17% by 2020 - from 18% currently.
Short-term use of business assets
From April 2017 employees will only be taxed on business asssets for the period that the asset is made available for their private use.
Following consultant, the Government will legislate to clarify and improve certain aspects of partnership taxation to ensure profit allocations to partners are fairly calucated for tax purposes. Draft legislation will be published for consultantation.
Tax-advantaged venture capital schemes
In the Finance Bill 2017 the government will amend the requirements for the tax-advantaged venture capital schemes - the Enterprise Investment Schemes (EIS), the Seed Enterprise Investment Schemes (SEIS) and Venture Capital Trust (VCTs) to:
clarify the EIS and SEIS rules for share conversion rights, for shares issued after 4 December 2016
provide additional flexibility for follow-on investments made by VCTs in companies with certain group structures to align with EIS provisions, for investments made after 5 April 2017
introduce a power to enable VCT regulations to be made in relation to certain shares for share exchanges to provide greater certainty to VCTs
consult on options to streamline and prioritise the advance assurance service
The government will not be introducing flexibility for replacement capital within the tax-advantaged venture capital schemes at this time, and will review this over the longer term.