By John Macintosh, Corporate tax partner, Deloitte
Philip Hammond’s first Autumn Statement also happened to be his last. But in a significant change from the fast-moving world of politics, it’s not because he’s being replaced, standing down, or switching ministerial portfolio.
Instead, among many of the UK Government’s new initiatives, Mr Hammond has made one of his first acts to abolish the Autumn Statement and introduce an Autumn Budget, with the first to be in Autumn 2017. The traditional Budget will be replaced with a Spring Statement from April 2018, albeit with no major fiscal changes, unless necessitated by major shifts in the economy.
Despite all that came before it, and it was in fact Mr Hammond’s final measure in his last-ever Autumn Statement, no doubt it will be one of the most-talked-about and long-standing moves from today.
But what else happened? Well, the good news is that there were few surprise tax announcements – although there are many new spending changes.
There was good news for low earners, families and motorists across the country. The Chancellor announced the planned fuel duty rise was to be scrapped again, saving the average driver about £20 per year, while the Living Wage will be increased by 30p per hour to £7.50 from April 2017. The Tax-Free Allowance will also go up to £11,500 next year and the Chancellor confirmed it will rise to £12,500 by the end of this parliament. However, individuals and businesses won’t welcome another 2% increase in Insurance premium tax from June 2017, which would cost a two-car family about £21 annually.
There was equally good news for Scotland. The Scottish Government can expect to see an extra £800 million per year through the Barnett Formula, thanks to increased capital spending in England. Work has also begun on agreeing a City Deal for Stirling, the last of Scotland’s cities to receive such a package. Edinburgh and the Tay region’s deals are also moving along.
On the less headline-friendly front, there were welcome extensions to existing measures for businesses. Mr Hammond confirmed the UK Government’s continued support for the oil and gas industry, good news for Aberdeen and the wider region in the face of lower for longer oil prices. However, there were no new tax announcements.
Likewise, corporation tax will fall to 17%, as planned; making the UK one of the most competitive places in the developed world to do business. A £6.7 billion package to reduce business rates was also mentioned, providing some much-needed relief for organisations of all shapes and sizes.
Moreover, there were several measures that bode well for Edinburgh and Scotland’s burgeoning life sciences and tech scenes. Among them, the Chancellor announced plans to increase R&D investment by an extra £2 billion per year, along with a £400 million venture capital fund through the British Business Bank – all part of a £23 billion investment fund for innovation and infrastructure.
Those who lost out? At first glance, there weren’t too many. Landlords and estate agents won’t be too enthusiastic about the proposed ban on letting fees, while those who currently sacrifice part of their salary for other benefits (or receive an optional cash allowance) will pay more tax from April 2017, with some grand-fathering for those already receiving benefits. On the latter, a few exceptions were mentioned, but the detail still needs to be pored over.
All of the measures announced in the last-ever Autumn Statement will require further study; but, on the face of it, there are a number of reasons to be encouraged. We’ll know more about what’s in store for Scotland on December 15 following the Scottish Budget – which may outline how the extra £800 million the Scottish Government is going to receive will be spent, as well as set out details of Scottish income tax rates and thresholds.
In the meantime, follow us on @DeloitteScot for further commentary and tweet us your responses to the announcements.