The Chancellor of the Exchequer, Philip Hammond, gave his first and last Autumn Statement on the afternoon of Wednesday 23 November 2016. It was a relatively short speech and full of humour, unlike the Shadow Chancellor’s response which followed.
The initial headlines are:
The last Autumn Statement
As previously mooted, the Chancellor took the opportunity to change the current fiscal timetable. The Spring Budget 2017 will be the last springtime budget, thereafter there will just be an annual Autumn Budget commencing in 2017. This should mean that tax changes will only occur once a year, unless in exceptional circumstances and will allow for changes to be made well in advance of the start of the next tax year. The government will still need to respond six-monthly to the updated Office of Budget Responsibility’s (OBR) forecasts, however.
The government have removed the commitment for the economy to be in surplus by 2019/20 and that this would occur “as early as possible” in the next parliament. OBR deficit forecasts are reflective of this and are:
The OBR forecasts in regards to growth are showing a reduction in all years except 2016, with the estimate that the EU referendum decision is likely to result in the UK’s Gross Domestic Product (GDP) being reduced by 2.4% by 2021.
OBR Growth forecasts
A new national productivity fund of £23bn over the next five years for infrastructure and innovation investment, with an additional £2bn per year in research and development by 2020.
Additional spending on housing, with £2.3bn to focus on infrastructure investment in areas of need and £1.4bn to help fund an additional 40,000 of affordable homes.
Additional spending on transport, with £1.1bn to be spent on English local transport networks and an additional £220m spent updating traffic “pinch points”.
Investment in a further 2,500 prison officers, as previously announced.
There were no significant changes in regards to taxation, although the following planned changes were announced again in the Autumn Statement:
Insurance premium tax is to rise again, from 10%, to 12% in June 2017.
National Insurance employee and employer thresholds to be equalised at £157 per week in April 2017, resulting in an increase in employer contributions.
National Living Wage to increase from £7.20 per hour to £7.50 per hour from April 2017.
The planned Fuel Duty increase was again cancelled.
A consultation was launched to reduce the Money Purchase Annual Allowance, the maximum contribution able to be received by an individual after ‘flexibly accessing benefits’ (via Flexi-Access Drawdown or receipt of an UFPLS), from £10,000 currently to £4,000 from April 2017.
As previously announced, the government will look to ban pension cold calling and target pension scams and scammers.
Savings and investments
The government announced plans for a new National Savings & Investment 3-year savings bond to be introduced in Spring 2017, which is expected to offer 2.2% gross per annum with a maximum investment of £3,000 each.
Not announced, but ISA subscription limits increasing to £20,000 from 6 April 2017, with the limits for Junior ISAs and Child Trust Funds uprated in Consumer Price Index to £4,128.
This is far from all the changes announced, with further commentary to be provided on our website over the next few days.
This article is based on our interpretation of the Chancellor’s speech and on initial documentation available on the gov.uk website, which cannot be guaranteed and could be subject to change.
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