Philip Hammond, Chancellor Philip Hammond has just announced his first and last Autumn Statement, as from 2018 the Budget will move to the autumn with a Spring Statement being made to the Office for Budget Responsibility (OBR). Below we list the key announcement that impact on UK businesses:
National Productivity Investment Fund (NPIF) of £23 billion to address that the UK is 30 per cent below USA and Germany, 20 per cent France and 8 per cent Italy. The NPIF will target four key areas:
£2 billion extra on Research and Development (R&D) to be made available by 2020-21. This is on top of the R&D tax credit scheme at nearly £2.5 billion and Innovate UK delivery plan at £561 million for 2016/17. To ensure the UK tax system is strongly pro-innovation, the government will review the tax environment for R&D to look at ways to build on the introduction of the ‘above the line’ R&D tax credit to make the UK an even more competitive place to do R&D.
‘The Chancellor’s last Autumn Statement contains a lot of good news for British businesses,’ says Barrie Dowsett, CEO of R&D tax and grant specialists Myriad Associates. ‘We particularly welcome the promised boost for Research and Development, which is a welcome reassurance for companies which may have been concerned about funding after the referendum vote.
‘We know from the government’s own statistics that supporting R&D through tax incentives and specific grants is a proven method for encouraging innovation, increasing employment, and boosting economic growth. We therefore consider the measures mentioned in this statement to be very positive steps forward, which will strengthen the position of innovative British businesses in world markets, and which all British businesses involved in R&D will welcome.’
Infrastructure – £1.1 billion on road and local transport, £220 million traffic pinch points, digital signalling. £390 million on ultra-low emissions vehicles, renewable fuels and connected and autonomous vehicles. Rail will receive £450 million to trial signalling technology and £80 million for smart ticketing.
£1 billion to digital infrastructure including full-fibre connections and 5G mobile network. 100 per cent capital allowances on digital infrastructure projects.
£400 million into venture capitalist fund for start-up’s and high-tech businesses
£1.8 billion to Local Enterprise Partnerships
Corporation tax to fall to 17 per cent by 2020
Supporting management skills – The government will provide £13 million to support firms’ plans to improve their management skills by implementing Sir Charlie Mayfield’s review of business productivity.
Business rates – To remove the inconsistency between rural rate relief and small business rate relief the government will double rural rate relief to 100 per cent from April 1st 2017
The National Insurance secondary (employer) threshold and the National Insurance primary (employee) threshold will be aligned from April 2017, meaning that both employees and employers will start paying National Insurance on weekly earnings above £157.
Termination payments – as announced at Budget 2016, from April 2018 termination payments over £30,000, which are subject to income tax, will also be subject to employer NICs. Following a technical consultation, tax will only be applied to the equivalent of an employee’s basic pay if their notice is not worked, making it simpler to apply the new rules.
Insurance Premium Tax to rise from 10 per cent to 12 per cent from June 2017.
Salary sacrifice schemes to be scaled back from April 2017 except for arrangement relating to pensions, childcare and cycle to work. Arrangements in place before April 2017 will be protected until April 2018, and arrangements for cars, accommodation and school fees will be protected until April 2021.
The government will introduce rules that limit the tax deductions that large groups can claim for their UK interest expenses from April 2017. These rules will limit deductions where a group has net interest expenses of more than £2 million, net interest expenses exceed 30% of UK taxable earnings and the group’s net interest to earnings ratio in the UK exceeds that of the worldwide group
VAT flat rate scheme to be abolished
£2 billion to be raised from abolishing tax schemes such as disguised remuneration schemes
Personal allowances raised to £11,500 in April 2017 as planned
National living wage from £7.20/hour to £7.50/hour from April 2017
