It didn’t seem overly exciting; however, there are always snippets within the details that will have a major impact. Flat rate vat changes will impact many of our clients. Disguised remuneration also came up again. We will of course look into the detail and notify our clients of any impacts on them.
Chancellor Philip Hammond was rather comical in his approach, in particular mocking the appearance of Ed Balls on strictly. We wonder if he voted for him.
Another early identifier of the tone was where Theresa May confirmed there would be no 2nd referendum on Brexit!!!
On to the details of the statement itself and how this will affect small businesses
Lettings agents in England will be banned from charging fees to tenants “as soon as possible” under plans announced in the Autumn Statement. Tenants can be charged fees for a range of administration, including reference, credit and immigration checks. Chancellor Philip Hammond said shifting the cost to landlords will save 4.3 million households hundreds of pounds.
The move could spur competition as landlords, unlike tenants, can shop around for the cheapest agent. It could also lead to increased rents.
There will be large investment on digital structure – investing in a 5G network – Hammond wants the UK to be a “world leader” in 5G, implementing a full-fibre network , introducing improvements in speed, security and reliability. The government will invest in excess of £1bn into the UK’s digital infrastructure and will back this up with 100 per cent business rates relief for a five-year period on new fibre infrastructure.
- £400m of funds made available for startups through the British Business Bank. Good for a tech business looking for investment?
The Employee and employer NI thresholds are to be aligned to £157 per week
The National Living Wage, the replacement for the National Minimum Wage, will increase from £7.20 to £7.50 in April 2017. According to the government, this will mean a pay rise worth of over £500 a year to a full-time worker.
There will be an increase in the tax-free personal allowance to £12,500 by the end of the current parliament. It will continue to rise with inflation once it reaches that £12,500 target.
Hammond confirmed the government commitment to follow through on planned corporation tax cuts to 17% announced previously by George Osborne
From April 2017, most salary sacrifice schemes will be subject to the same tax as cash income. However, pensions, pensions advice, childcare, Cycle to Work and ultra-low emissions cars schemes will be exempt from the changes. Any arrangements in place before April 2017 will be protected for up to a year, and arrangements in place before April 2017 for cars, accommodation and school fees will be protected for up to four years
Hammond announced a major crackdown on the inappropriate use of the VAT flat rate scheme that was put in place to help small businesses. If your expenses allowable expenses are less than 2% of your gross turnover you will not be able to apply the normal flat rate scheme and have to use a standard 16.5%. This effectively negates the benefit of flat rate i.e. invoice £1,000+VAT at 20% would be £1,200 at 16.5%, therefore £200 vs £198 of payable vat. We will be conducting a review of clients on the VAT flat rate scheme and seeing how they are affected.
- Alignment of company to self employed tax. A huge change to structure
- Salary sacrifice advantages deemed “unfair” by Chancellor and to be removed from April 2017
Insurance premium tax to rise from 10 to 12% from June 2017
- New Market leading savings and investment bond which will allow savers to benefit
- fuel duty rise cancelled for 7th successive year
- Abolishes the Autumn Statement – this will be his last. Autumn Budget and Spring Statement instead. Will be welcome and provide more time for businesses to plan.
- The government is to tackle what it describes as “disguised remuneration schemes” by the self-employed. This will ensure that self-employed users of these schemes pay their fair share of tax and National Insurance.
- Govt to publish crucial response to #MakingTaxDigital in January 2017
- Remove tax benefits of disguised earnings of self employed
The proposal would transfer the responsibility for ensuring a limited company contractor does not fall within IR35 to the party that pays the contractor, rather than the contractor themselves. HMRC has said that they are working on a digital tool that will provide a real-time assessment on whether IR35 applies.
The government will publish its response to the Making Tax Digital consultations in January 2017 which require small businesses to submit quarterly updates on their tax information to HM Revenue & Customs.
The full documents are here