In the near term, the UK’s economic outlook has become more uncertain. The Brexit decision to leave the EU presents both challenges and opportunities. The Autumn Statement has released a set of policies that have been designed to assist with this transition. It prioritises key investment to improve productivity and ultimately living standards.
Changes previously announced for personal tax changes have been adhered to and will continue to provide benefits into 2017-18.
The two budget announcements each year that we have previously been used to will be quickly phased out and we will have a single budgetary announcement in the Autumn, this will be in place by Autumn 2017.
The Office for Budget Responsibility (OBR) forecasts the following GDP growth over the next five years:
- 1.4% in 2017 (this is a slowdown)
- 1.7% in 2018
- 2.1% in 2019
- 2.1% in 2020
- 2.0% in 2021
National Productivity Investment Fund
A new NPIF which will be targeted at 4 areas that are critical for improving productivity: housing, transport, digital communications and research and development (R&D). This fund will add £23 billion in high value investment from 2017-18 to 2021-22
The NPIF will provide for £23 billion of spending between 2017-18 and 2021-22
- accelerate new housing supply
- tackle congestion on the roads and ensure the UK’s transport networks are fit for the future
- support the market to roll out full-fibre connections and future 5G communications
- enhance the UK’s position as a world leader in science and innovation
In the Autumn Statement the government chooses to borrow only to invest in highly-targeted infrastructure and innovation projects that which will boost productivity.
Income Tax & National Insurance
- the government recommits to raising the personal allowance to £12,500 and the higher rate threshold to £50,000 by the end of the Parliament
- the business tax road map, including cutting the rate of corporation tax to 17% by 2020
- freeze fuel duty from April 2017
- take action to promote fairness in the tax system and will add sanctions and deterrents to tackle tax avoidance
- ensure multinational companies pay their fair share
- Insurance Premium Tax rise from 10% to 12% in June 2017
Pensions & Savings Tax, Capital Gains Tax
There are a number of adjustments across these taxation categories which is summarised below:
- ISA limit to be increased from £15,240 to £20,000 in April 2017
- the Money Purchase Annual Allowance will be reduced to £4,000 from April 2017
- the rate of corporation tax will be cut to 17% by 2020
- Employee Shareholder Status (ESS) – The tax advantages linked to shares awarded under ESS will be abolished for arrangements entered into on, or after, 1 December 2016
Previously announced tax changes should see income tax reductions in 2017-2018. To get a personal understanding of how this may affect your plans, please CONTACT US.
With the pound being weakened post the Brexit decision, there is an expected roll on effect that will be seen with inflation. The Office for Budget Responsibility predicts that the Consumer Price Index (CPI) will see inflation at:
- 2.3% in 2017
- 2.5% in 2018
- 2.1% in 2019
- 2.0% in 2020
- 2.0% in 2021
With deficits still high in Public Spending, the government is looking to control public spending, with new initiatives (with the exception of the NPIF discussed above) now all fully funded.
Our team remain committed to supporting you through these changes, should you have any questions, please CONTACT US
The Autumn Statement can be read in full here: