The Chancellor of the Exchequer gave his Autumn Statement to Parliament on 23 November 2016, but what’s its impact on the UK’s economy and how does it affect the individual as well as UK businesses?
The UK economy is forecast to be the fastest growing major economy in 2016, but the Office for Budget Responsibility has forecast growth to slow and inflation to rise over the next two years. Despite this; employment is set to rise continually over the next 5 years with half a million more people forecast to be in work by 2021.
For the individual
In 2017, fuel duty will remain frozen for the seventh successive year, saving drivers £130 a year on average.
To support savers, NS&I will offer a new three-year Investment Bond with an indicative rate of 2.2% from spring 2017. The bond will offer the flexibility to put away between £100 and £3,000 and be available to those aged 16 or over.
The Personal Allowance is the amount of income you can earn before you start paying income tax. It is currently £11,000, and will rise to £11,500 in 2017-18, and £12,500 by 2021. The point at which you pay the higher rate of income tax will increase from £43,000 this year, to £45,000 in 2017-18. This is set to increase to £50,000 by 2021.
The National Living Wage for those aged 25 and over will increase in April 2017 from £7.20 per hour to £7.50 per hour. More will also be spent on clamping down on those who do not pay the national minimum wages.
The main rate of corporation tax has already been cut from 28% in 2010 to 20%, and will be cut again to 17% by 2020, by far the lowest in the G20 and benefitting over 1 million businesses.
Rural rate relief will increase from 50 to 100% in April 2017, saving a business up to £2900 a year. This business rate relief is available to businesses in rural areas with a population under 3,000
A new penalty is being introduced for those helping someone else to use a tax avoidance scheme. Tax avoiders are hit with significant bills when HMRC defeats their avoidance scheme, this new penalty will ensure that those who help them will also face the consequences.
From April 2017, most salary sacrifice schemes will be subject to the same tax as cash income. In salary sacrifice schemes, employees exchange some of their salary for a non-cash benefit in kind (such as a mobile phone). Both the employer and employee make a tax saving, because the benefit is taxed less than a salary or not taxed at all.
Insurance Premium Tax (IPT) will increase from 10% to 12%. IPT is a tax on insurers and it is up to them whether and how to pass on costs to customers.
In summary the Autumn Statement appears to have been designed to get people back in work to stimulate the economy and growth. How well it will work remains to be seen and depends upon many other factors. To see how these changes can affect your business or for financial assistance, get in contact with a member of our team.