Autumn Statement – Now the Dust has Settled.
In his latest UK200Group blog post, Mike Chapman, Senior Manager, Corporate Tax, at Knill James Chartered Accountants, examines the Autumn Statement and the key messages it sought to impart.
It has been only six weeks since the Autumn Statement, but in these fast-moving times it now seems an age away. How then with the benefit of hindsight does the Statement itself hold up and what were the key messages it sought to impart?
Following the Brexit referendum result, a Donald Trump presidential victory and Leicester City winning the Premier League, maybe we were due for an antidote to all that excitement. Philip Hammond, in his first time at the dispatch box as Chancellor, certainly gave a ‘business as usual’ offering, presumably hoping that the relatively encouraging UK post-Brexit economic performance could be maintained, despite the possibility of turbulent times ahead. There was no doubt that the environment had changed significantly since George Osborne’s last Budget with the predictions of the Office for Budget Responsibility (OBR) in marked contrast to those of eight months earlier.
With a downbeat forecast for growth in 2017 it was important that the Chancellor presented the UK as the natural home for business and he stressed the commitment of several high-profile multinationals to continue to invest in the UK economy. The drop in the headline rate of corporation tax to 17% from 1 April 2020, the lowest rate in the G20, confirmed the Chancellor’s priority, “to ensure that Britain remains the number one destination for business” while acknowledging the importance of certainty and stability to business as a whole.
On a less upbeat note, Mr Hammond did not shy away from the issue of the productivity gap between the UK and its immediate competitors and focussed on the need to bridge this divide through research and innovation in providing £2bn per year by 2020 for R&D funding.
The actual fiscal announcements were few, but the confirmation that the Government still intended to raise the income tax allowance to £12,500 and the higher rate threshold to £50,000 by the end of this parliament, was welcome and presented a much-needed picture of continuity. There was further continuity in his voicing concern regarding the taxing of different forms of remuneration and it appears that in time, legislation will be introduced to tackle perceived avoidance by the self-employed. Recent developments within the ‘gig’ economy seem to be an obvious target for anti-avoidance legislation.
For once the form of the message rather than the substance seemed to be of greater importance and many commentators were impressed with the forthright nature of the Chancellor’s performance against a difficult backdrop. How that backdrop will appear and how the OBR forecasts may again alter once Article 50 is triggered will be Mr Hammond’s next big challenge.
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