2016 Autumn Statement

Chancellor Phillip Hammond announced his first Autumn statement in November 2016 with a clear message that the UK is still open for business. This is likely to be the last Autumn Statement as he plans to move the Budget to the Autumn and replace it with an annual Spring statement.

Growth forecasts have been revised downwards due to uncertainty over the impact of Brexit. The Budget Deficit, previously forecast to move to a Surplus position by 2020 will no longer be achieved and will be pushed back a few years.

The Government focus will be on increased investment in infrastructure and innovation with a Budget of £23 billion to spend on relevant projects. £2 billion has been put aside to enable easier financing and aid research and development at disruptive technology companies in the UK to not only help them grow, but also remain in Britain. This is good news for Aim listed companies and also UK contractors, particularly in the IT or engineering sectors.

Significant tax announcements:

• Personal Allowance to rise from £11,000 to £11,500 in April 2017. This is forecast to rise to £12,500 by 2020.
• The higher rate income tax threshold to rise to £50,000 by 2020.
• The National Living Wage to rise from £7.20 an hour to £7.50 from April 2017.
• The rate of corporation tax will reduce to 17% by 2020.
• From April 2017, tax deductions for interest will be restricted for large groups where debt exceeds 30% of UK taxable income.
• From April 2017, Companies with taxable profits over £5m will be subject to new rules that restrict the offset of carried-forward losses to 50% of the profit.
• New Flat rate of VAT of 16.5% for “Limited cost traders”. This will impact many Limited Company Contractors.

Other announcements:

• Insurance premium tax to increase in June 2017 from 10% to 12%.
• Proposed ban on upfront fees charged by letting agents.

In general, the announcements are in line with proposals from the previous Budget announcement and so there are no major surprises. The new Flat rate of VAT will impact UK Limited Company Contractors who will be worse off and will need to consider whether it is worthwhile being Flat rate registered post March 2017.