Autumn Budget Summary - Some Business Highlights

The new Chancellor announced a reduced growth target and predicted a tougher economic period during the transition towards Brexit. The target set out by his predecessor to achieve a surplus by 2020 has been set aside, with growth predicted to fall to 1.4% in 2017 and cumulative borrowing over the next five years predicted to be £122bn higher than was planned, prior to the EU referendum.

Many of the measures were revealed in advance by Mr Hammond, but he kept a surprise announcement to himself, telling Parliament that the twice-yearly Budget statement will be consigned to the history books. In future, there will be a single set of taxation changes each year, with effect from Autumn 2017, to enable greater scrutiny of new taxation rules before implementation.

Big spending announcements included £2.3bn to the housing infrastructure fund to support the development of 100,000 new homes in high-demand areas and a further £1.4bn to deliver 40,000 extra affordable homes.

There was also a tax break for higher rate tax payers, with the threshold extended from £43,000 of taxable income this year, to £45,000 in 2017.

The National Living Wage, the minimum hourly rate payable to those aged over 25, will rise from £7.20 per hour to £7.50 from April 2017. 

There are new measures to tackle schemes where loopholes or tax avoidance advantages had been exploited. Those include the flat-rate VAT scheme, with a new 16.5% rate from April 2017 for businesses with limited costs, such as many labour-only businesses.

There are changes also to Employee Shareholder Status (ESS) arrangements, in response to these being used primarily for tax planning to avoid capital gains tax, rather than the original intention of supporting a more flexible workforce. And for bigger companies, new rules will limit the tax deductions that large groups can claim for their UK interest expenses from April 2017.

Elsewhere for business, from April 2017 there will be a change to employer National Insurance (NI) thresholds, to £157 per week, which will cost employers on average £7.18 per year for each worker, and salary sacrifice schemes will start to attract the same taxes as cash payments. Currently, where employees receive a non-cash benefit in kind, like a mobile phone or healthcare, there is a tax saving for both the employee and the business.

Better news for business is the £1bn committed to digital infrastructure, the £2bn to be available each year by 2020 for research and development funding, and confirmation that corporation tax will fall to 17% as planned by 2020.

The Chancellor also launched an attack on letting agents, with fees charged to tenants set to be abolished, although the implementation date is yet to be confirmed.

“Banning estate agents from charging fees to tenants is likely to result in landlords feeling a bit more of a squeeze, following on from last year’s stamp duty rise on buy-to-let and second homes, as it’s quite likely the loss will be passed on to them by the agents" says partner and head of the Commercial Department, Gillian Jones. "Whether that, in turn, is passed to the tenants through higher rents is something that remains to be seen.”

It is likely that businesses will be discussing many of the proposed changes with their accountants in the first instance. For advice and assistance in implementing any 'accountant recommended' changes contact Gillian Jones.

 
 
 

Scroll down
There's more to see!

close