On Wednesday 23rd November 2016 Philip Hammond delivered his first Autumn Statement as Chancellor.
The OBR’s forecasts reflect a new set of circumstances for the UK economy, resulting from the decision to leave the EU. In the short term there remains economic uncertainty for the upcoming periods of negotiation and longer term the economy will need to adjust to new relationships with the EU and the rest of the world.
As a result the government has back-peddled on seeking a budget surplus in 2019-2020 and are instead committed to returning public finances to balance “as soon as practicable”.
In order to provide more certainty and stability to businesses and individuals it was announced that the government intends to issue the annual budget as a single annual statement in the autumn of each year.
There was an emphasis on achieving a fair and sustainable tax system through a number of initiatives in which employee remuneration schemes, benefits and tax reliefs seem to be at the top of the agenda.
Further sanctions on disguised remuneration tax avoidance schemes were announced for both the tax avoider and more notably those facilitating the schemes.
In addition, from April 2017, most salary sacrifice schemes will lose their tax benefit. Pensions, childcare and low emission cars will continue to be exempt from these provisions and many employers will need to take advantage of the one-year’s grace provided for existing schemes to review their remuneration packages.
A policy paper was also issued relating to the status of employee shareholders. This has been based on evidence suggesting that employee shareholder status is not being used as intended and therefore withdrawal of income tax and CGT reliefs will take effect from 1 December 2016. Only individuals who become employee shareholders on or after this date will be affected by this measure.
It was also suggested that there will be further reviews on the valuations of benefits in kind ahead of the budget in 2017.
On a more positive note it was confirmed that the main rate of corporation tax will be cut to 17% by 2020 which Mr Hammond said is ‘by far the lowest’ of G20 nations and will benefit over 1 million businesses.
The government also want to ensure that the UK tax system is strongly pro-innovation, and a review into the tax environment for research and development will consider ways in which it can make the UK a more competitive place to carry out Research and Development.
Finally the “making tax digital” initiative remains on the table with an announcement expected in January 2017 detailing its response to the consultations and its provisions to implement the previously announced changes.