UK: UK Autumn Statement: The First And The Last

Last Updated: 24 November 2016
Article by Vince Cheshire

Chancellor of the Exchequer Philip Hammond has given his first Autumn Statement to the House of Commons and announced that it would also be his last.

On 23 November 2016, UK Chancellor of the Exchequer Philip Hammond gave his first Autumn Statement to the House of Commons and announced that it would also be his last. However this was not a surprise resignation at the end of his speech, but an announcement of a timetable change for future years.

From next year, the Budget will be announced in the Autumn followed by a statement the following Spring responding to economic forecasts. Mr Hammond announced that he does not intend to make tax changes in the Spring statements; time will tell if this promise will be met. This Autumn Statement was the Chancellor's first opportunity, since the 23 June referendum, to outline the UK government's plans on spending and taxation. The following is a summary of what Chancellor Hammond said, and a brief overview of some of the documents published alongside, excluding Foreign Pension, Value Added Tax and Insurance Premium Tax measures. As usual, there is much detail to come and the overall effect of the Statement will take some months to establish.

Background

Philip Hammond was appointed Chancellor of the Exchequer following the Brexit referendum result and since then economic forecasters, including the Office of Budget Responsibility, have downgraded future growth prospects for the UK economy. Theresa May in her campaign to be Prime Minister proposed that the government should drop its target to eliminate the budget deficit by 2020/2021, and Mr Hammond confirmed this timeline had been dropped in his speech; replaced by various targets, including to reduce the cyclically-adjusted deficit to under 2% of Gross Domestic Product by 2020/2021.

Infrastructure and innovation

The main theme of the Chancellor's speech was investment in infrastructure and innovation to improve productivity. Alongside this, he announced that the cost of installing electric vehicle recharging equipment incurred between 23 November 2016 and 31 March 2019 could be entirely written off against tax in the year of expenditure.

Corporation tax

The previously-announced plan to reduce corporation tax to 17% from 1 April 2020 (19% from 1 April 2017) remains unchanged, with no further reduction given despite media speculation.

The Chancellor also announced that the government would restrict the amount that multinational companies can offset their taxable income using high interest charges or brought forward losses. Documents issued alongside the Autumn Statement indicate that the Chancellor intends to extend these restrictions to overseas companies with UK income by bringing these companies into the corporation tax regime. This could have a significant impact on leveraged non-resident companies buying UK real estate.

Personal income tax

Mr Hammond reversed one of his predecessor's initiatives. George Osborne had allowed employees to receive up to £2,000 of shares tax-free from their employer, in return for giving up certain employment rights. The government have found that this is largely being used by higher earning employees (what did they expect?) and is removing it for shares issued on or after 1 December.

Mr Hammond did however reiterate his predecessor's commitments to increase the personal allowance (the amount of income that can be earned free of income tax) to £12,500 by 2020 (the allowance rises to £11,500 from 1 April 2017) and to increase the threshold at which 40% income tax is paid, to £50,000 also by 2020.

National Insurance

Employer and Employee National Insurance contribution (NIC) thresholds are to be aligned at £157 per week from 6 April 2017 and, in another revenue raising measure, the Chancellor announced that the tax advantages of salary sacrifice benefits would be abolished, except for pension contributions, childcare benefits, ultra-low emission vehicles and cycle-to-work equipment. Mr Hammond announced an intention to review the valuation of employment benefits for tax purposes in 2017, particularly the provision of living accommodation. He is also reducing the amount that an individual can contribute to a pension scheme, once he is drawing a pension, from £10,000 to £4,000.

Some payments on the termination of employment of up to £30,000 remain tax-free under certain circumstances. From April 2018, payments in excess of £30,000 will be subject to NICs as well as income tax.

Mr Hammond announced the introduction of a new savings bond by National Savings & Investment, which he expects will pay 2.2% gross for 3 years capped at £3,000 per person. Full details will be announced in the Spring 2017 budget.

The Autumn Statement confirmed previous announcements that UK residential property held indirectly through offshore trusts and companies will be subject to inheritance tax and announced that non-domiciled individuals will be subject to inheritance tax after being resident for 15 of the past 20 years.

The Chancellor was heavily constrained by the UK's huge budget deficit and so the measures announced or re-announced were relatively insignificant. This Autumn Statement will probably mostly be remembered for being Mr Hammond's first, and last.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
3 Oct 2019, Webinar, Rotterdam, Netherlands

To view this Webinar in full click here

24 Oct 2019, Business Breakfast, London, UK

Join TMF Group and ACCA for breakfast and a briefing session dedicated to the latest VAT changes and how they affect the UK.

21 Nov 2019, Conference, Shanghai, China

Retail remains a significant growth opportunity even as GDP slows, but the challenge of recruiting and retaining quality staff must never be underestimated and managing these issues successfully can define the winners and losers. TMF Group’s 2019 Annual Retail Summit in Shanghai brings together industry professionals to share opinions on the key differentiators that can lead to achieving growth targets and maintaining momentum for your retail business in China.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions