Autumn Budget 2017

A Britain We can be Proud of and that is Fit for the Future!

Philip Hammond delivered the Autumn Budget in 62 minutes, stating at the outset: “we choose the future” and that his party will “invest to secure the bright future of Britain” through a balanced approach on the Budget. 

The Budget was, in the end, more interesting than expected. Underpinned by a still-firm commitment to reduce the deficit and cut borrowing, but clearly influenced by a beleaguered Tory party’s desire to win voters over, there were many pledges of large investments and funding for the NHS, house builders, homelessness projects and technology businesses, as well as tax breaks for first time buyers and technology investors.

Budget 2017

Key areas of interest to our clients will be:

Employment tax:

  • No extension of off-payroll working to the private sector, yet. but the Government is continuing to consult
  • National Minimum Wage – over ate increased to £7.83 per hour from April 2018 (youth rates to rise as well)
  • Company cars:
    - fuel benefit charge and van benefit charge to increase by RPI form April 2018
    - Company car fuel – increase in diesel supplement from 3% to 4% from April 2018
    - Electric cars – no benefit on workplace charging from April 2018
  • Compliance – additional £155 million of funding to HMRC to increase compliance activity

James Hunt, Employment Services Manager commented: “a low-key Budget for the employment taxes arena, with the potential for greater changes further down the line based on the off-payroll and employment status matters the Governments is still consulting on.  However, the increase in funding for HMRC compliance, coupled with the new Corporate Criminal Offence, means businesses need to be more certain than ever that arrangements within both their own company and their supply chain are not leaving the Chancellors coffers short.”

VAT:

  • VAT registration threshold to remain at £85,000 (Deregistration threshold £83,0000) for 2 years to allow time for HMRC to consult on changing the VAT registration threshold. The failure to raise the VAT registration threshold is expected to bring in an addition 6,000 businesses into the scope of VAT
  • All VAT registered businesses will be required to comply with “Making Tax Digital” from 1 April 2019
  • The previously announced anti-avoidance rules will be extended to all online market sellers, who may be held joint & severally liable for customers failure to register for VAT. Additional legislation to be included around displaying VAT numbers online

Corporate tax:

  • A further £2.3 billion allocated for investment in research and development, and the main R&D expenditure credit increased from 11% to 12%
  • Companies will no longer get relief for inflation due to Indexation on capital gains being frozen from Jan 2018 whilst case for removing indexation allowance for capital gains considered
  • Digital economy royalties for UK sales which are paid to a low tax jurisdiction to be subject to income tax as part of tax avoidance clampdown

Stuart Gooderham, Corporate Tax Senior Manager says: “The government has continued to encourage companies to invest in research and development.   The unexpected announcement was the freeze on indexation for capital disposals by companies from January 2018, which will have an impact on investment companies going forward.”

Personal Tax:

  • Stamp duty to be abolished immediately for first time buyers purchasing properties worth up to £300k from today
  • Councils will now be able to charge 100% of the council tax premium on empty properties
  • Doubling of the EIS scheme for tech businesses
  • Tax free personal allowance on income tax to rise to £11,850 in April 2018
  • The higher rate threshold to increase from £45,000 to £46,350 in April 2018

Brexit, Tech, the NHS, alcohol, and The Midlands Engine:

  • £3bn pledged for Brexit over the next 2 years
  • £500m to be invested in artificial intelligence, 5G, and fibre broadband projects
  • £1.7bn to be invested in the new Transforming Cities Fund, with half earmarked for cities with elected Mayors (i.e. including Birmingham)
  • Chancellor “fully committed” to backing The Midlands Engine
  • Alcohol duties frozen, but Mr Hammond promised to legislate to increase duties on cheap, high street drinks like “white ciders” from 2019
  • £10bn to be invested in the NHS over the course of Parliament (i.e. until 2022), plus an extra £2.8bn “resource funding” over the next 3 years

Ellie Lewis, Private Client Tax Senior Manager commented: “Tax anti-avoidance is still clearly high priority, with 18 new measures (largely focused on offshore avoidance) announced that the Chancellor hopes will bring in £4.8bn over the course of Parliament.

There was no real explanation of how the many funding and investment announcements and tax breaks will be paid for, with the assumption being it will come from the much talked-about £26bn “headroom” in the public finances. However, the detail around this will be interesting reading, following the slashing of this headroom by as much as two thirds following the Office for Budget Responsibility’s recent downward revisions of growth and productivity.”