The Autumn Statement 2016
The last ever Autumn Statement was delivered this week by a Chancellor trying to steady the ship and set a predictable course through the stormy post-Brexit (and post “The Donald”) sea. You can hardly blame him. Our new lonely place in the world and the effect of Trumpism on the world stage is yet to be seen.
The main goal must necessarily be to keep Britain ticking over, gird the collective loins for a further exacerbation of the cost-living crisis and the unending sluggishness of wages growth. The political cost of increasing the national deficit for the time being matters not a jot. With Labour an ineffective opposition, the only political worry the Conservatives have is how to keep Nigel Farage out of the Ferrero Roche cupboard at the Foreign Office long enough to get Trump booked in for a state visit.
The result was a rather uneventful statement, perhaps befitting a political figure not known for his political ambition but well-known for being a safe pair of hands. We have summarised some of the key points as follows:
- Income Tax – As expected, the government will stick to its commitment to increase the income tax personal allowance to £12,500 and the high rate threshold to £50,000 by the end of this parliament. Once the personal allowance reaches £12,500, it will then rise in line with the Consumer Price Index.
- Non-domiciled individuals – the government has made good on its promise to level the playing field and end the permanency of non-domicile status. ‘Non-Doms’ will be deemed domiciled if they have been resident for 15 of the last 20 years – which may have an effect on Inheritance Tax Planning.
- Corporation Tax – Corporation Tax will be reduced to 17% despite recent calls from the City to the effect that further cuts might prove counterproductive down the line. Business rates will also be reduced.
- Stamp Duty Land Tax (SDLT) – There was no change to the SDLT code despite widespread speculation to the contrary. We invite you to contact us if you are considering a purchase soon.
Other points of interest
- The ruthless behaviour of the rental sector is to be curbed, with fees charged by letting agents to be met by landlords. It is unclear at this stage how much of this will be passed onto tenants in the form of increased rents. It is also unclear quite why the government despise the property sector so much.
- Tax savings on ‘salary sacrifice’ and ‘benefits in kind’ are to be halted, with exceptions for pensions, childcare, cycling, and low-emission cars. Gym memberships will be effected which is likely to lead to a decrease in #newyearnewme posts on social media come January.
- The National Living Wage is to increase from £7.20 an hour to £7.50 from April next year. Good news but unlikely to defray the imminent post-Brexit/post-Marmite rise in grocery prices.
- Insurance premium tax to rise from 10% to 12% next June. Because no-one ever wrote a folk song about people’s insurance premiums going up.
- There will be an extra £1.1bn investment in English local transport networks.
One should perhaps also mention that this was actually the last Autumn Statement. There will be no more. The Chancellor announced that Budgets will instead take place in the autumn, with ‘Spring Statements’ to begin in 2018 and the first annual Hunger Games to follow soon afterwards.