Key points of Autumn Statement and its pros and cons

“Following the decision by the UK to leave the European Union, it perhaps came as no surprise that the Office for Budget Responsibility's (OBR) decided to revise down growth forecasts. A number of our clients have cited the economic uncertainty as the primary reason for postponing investment decisions.

The Chancellor’s announcement that £191million will go to local enterprise partnerships in the South West to help improve transport connections, housing, training and digital connectivity will be welcomed by businesses in the region.

Mr Hammond conceded that the concentration of economic growth in London and the South East was not good enough, and businesses in Bristol, Bath, Swindon and the surrounding areas hope a proportion of the £23billion National Productivity Fund for infrastructure and innovation will be assigned to projects locally.

The South West, and particularly Bristol, is rich in tech companies and start-ups, and the £400million injection into the British Business Bank to support venture capital funds is particularly welcome news for the region.

The campaign to scrap the 3% Stamp Duty Land Tax (SDLT) surcharge introduced in April for anyone buying a second home appears to have fallen on deaf ears. It is clear that the reforms have slowed the housing market, specifically buy-to-let, with holiday home buyers, parents buying for children and even flat owners seeking to extend leases on their properties also affected.

The abolition of the surcharge would also have created a greater supply of housing to the rental market and, therefore, a fall in rents. However, the Chancellor did at least attempt to give a break to tenants by announcing a future ban on letting fees - though how far this saving will be felt by individuals rather than merely passed on in the form of rent increases remains to be seen.

From the point of view of the landlords, a new £1,000 allowance for property income may offset the fees they could potentially pick up should the ban on agents charging fees come into effect. The consultation will provide greater clarity on what form the ban finally takes.

It wasn’t all uncertain news for housing, however, with £2.3billion being made available to build 100,000 new homes and a further £1.4billion to deliver 40,000 new “affordable” homes expected to ease pressures on housing demand and costs.

In terms of income tax, the Chancellor appeared to want to make the most of revenues from the recently improved employment market by, what he termed, "equalising" the taxation on remuneration of certain individuals.

The methodology for this seems to be a political re-categorisation of reliefs on certain employee benefits as “tax avoidance”.

From April 2017, the tax benefits of salary sacrifice schemes, which allow employees to give up part of their pre-tax wages to receive a benefit such as private health care, will disappear with a couple of exceptions, namely the pension contributions, the provision of low-emission cars, childcare vouchers and the cycle-to-work scheme.

There was also a promise to abandon the employee shareholder status. This regime was only introduced in 2013 and it allowed an employee that received at least £2,000 worth of shares in their employer (or a parent company of their employer) to receive income and capital gains tax benefits by agreeing to give up certain employment rights.

This was intended to foster more shared ownership which is often seen as at the heart of the success of the John Lewis Partnership. However, in practice many employees were nervous about giving up their employment rights and, therefore, often the people taking advantage of this regime were those holding senior positions that had little need for the employment rights.”

Key points of the Autumn Statement, provided by independent chartered accountancy group Monahans, which has offices in Chippenham, Melksham, Swindon and Trowbridge.

Effective immediately

From 23 November 2016 to 31 March/5 April 2019, businesses will be entitled to a 100% First Year Allowance for

the cost of installing electric charge point equipment for electric vehicles.

From 1 December 2016, income tax and CGT advantages of new shares issued in return for “employee shareholder status” will be withdrawn (shares already held not affected).

From April 2017

Income tax rates and allowances confirmed as announced at Budget 2016: tax?free personal allowance will be £11,500, threshold for 40% tax will be £45,000.

National Insurance thresholds for employers and employees to be made consistent at £157 per week (currently £1 apart at £155 for employees, £156 for employers).

Tax and National Insurance advantages of “salary sacrifice” schemes to be withdrawn, apart from arrangements involving pensions, childcare, Cycle to Work and ultra-low emission cars.

As previously announced, new trading and property allowances for £1,000 each for individuals with low levels of income from these sources.

New tax-free childcare arrangements to be introduced on a trial basis in early 2017 and rolled out later.

As previously announced, tax advantages of foreign domiciled status will be lost for those resident in the UK for 15 of the last 20 years, and UK property held by a foreign domiciled individual through offshore structures becomes chargeable to inheritance tax.

ISA investment limit rises from £15,240 to £20,000 per year.

Public sector employers become responsible for tax due from individuals working for them through personal service companies and similar arrangements.

Limit on pension contributions for those who have already made a flexible income drawdown from a pension scheme will fall from £10,000 per year to £4,000 per year. Limit for those who have not made such a drawdown remains £40,000.

Rural rate relief doubles to 100% to match small business rate relief.

Benefit of VAT Flat Rate Scheme almost completely withdrawn for businesses spending less than 2% of their turnover or less than £1,000 per year on goods, excluding capital goods, food, vehicles and fuel.

Reforms to restrict interest relief and relief for brought forward losses for corporation tax.

From 1 June 2017, Insurance Premium Tax rises from 10% to 12%.

New penalty for taking part in tax avoidance schemes that are held to be ineffective: VAT measures to be introduced from 1 September 2017.

New penalty for being connected with a VAT fraud in circumstances in which the person “knew or ought to have known” that a fraud was going on to be introduced from Royal Assent to Finance Bill 2017.

From April 2018

Class 2 National Insurance Contributions abolished; self?employed retain contributory entitlements through Class 4 NIC on profits or voluntary Class 3 contributions.

“Making Tax Digital” reforms apply to income tax, according to present Government plans; responses to consultations on the proposals to be published in January 2017.

To be announced

New measures to counter “disguised remuneration” schemes used by self-employed people and employers.