Autumn Statement 2016 – Key PointsNovember 24, 2016
Philip Hammond’s first Autumn Statement was also his last. Next year we will have a Spring Budget, then revert to an Autumn Budget, to be followed by a Spring Statement in 2018. The key announcements in this year’s statement are as follows:
- The tax and NIC advantages of most salary sacrifice schemes will be removed from April 2017, as announced in the Spring Budget, but there will be some transitional protections. Employees who swap salary for fringe benefits will be taxed in the same way as those who buy the benefits from their post-tax earnings. Pension contributions and some advice, cycle to work, childcare and low emission cars will be exempt from this new charge. However, arrangements in place before April 2017 will be protected until 2018 and arrangements for cars, accommodation and school fees will be protected until April 2021.
- The pensions money purchase annual allowance (MPAA) will be reduced from £10,000 to £4,000 from April 2017. This limit applies to people who have accessed their pensions flexibly and currently may therefore be getting tax relief on up to £10,000 of recycled pensions income.
- Foreign pensions and lump sums of UK residents will be fully taxed to the same extent as their domestic equivalents. Specialist pension schemes (s615 schemes) for people employed abroad will be closed to new saving. There will also be other significant changes to the tax rules for pensions of people who move overseas.
- The Junior ISA and Child Trust Fund limit will rise to £4,128 for 2017/18. The Government confirmed that the general ISA limit will rise to £20,000.
- The tax changes for non-doms announced in the Budget will also go ahead as already announced. From April 2017, non-UK domiciled individuals will be deemed to be UK domiciled if they have been UK resident for 15 out of the past 20 years or if they had been born in UK and have a UK domicile of origin.
- The Government renewed its commitment to reduce the rate of corporation tax to 17% by 2020. It will also limit the tax deductions that large groups can claim for UK interest expenses from April 2017.
- The Government confirmed it will go ahead with the limits on the amount of profit that companies can offset from carried forward losses to 50% from April 2017. The Government is also considering bringing all non-resident companies that receive taxable income from the UK into the corporation tax regime.
- Insurance premium tax will be increased from 10% to 12% from 1 June 2017.
- There will be a new 16.5% flat rate VAT for businesses with limited costs – such as labour-only businesses – from April 2017.
- The usual raft of anti-avoidance and evasion provisions have been announced, including a new legal requirement to correct a past failure to pay UK tax on offshore interests within a defined period of time. There will also be consultation on a new requirement for intermediaries who arrange complex structures for clients holding money offshore to notify HM Revenue & Customs of those structures and to provide lists of clients.
Please note, The Scottish Budget will be announced on 15th December when Holyrood will have new control over income tax and welfare, therefore some changes announced in yesterday’s Budget could be subject to change.