A summary of the 2016 Autumn Statement

Budget 2016

Chancellor Philip Hammond has said his first Autumn Statement; “Is focused on preparing and supporting the economy as we begin writing a new chapter in our country’s history”.

The 2017 spring Budget will be the final spring Budget. Starting in autumn 2017, Britain will have an autumn Budget Announcing tax changes in advance of the start of the tax year. From 2018 there will be a Spring Statement responding to the forecast from the Office for Budget Responsibility (OBR).

Here are the main points from this years Autumn Statement:

Taxation & Pay:

  • Income tax threshold to be raised to £11,500 in April, from the current £11,000
  • Higher rate income tax threshold to rise to £50,000 by the end of the Parliament
  • Tax savings on salary sacrifice and benefits in kind to be stopped, with exceptions for ultra-low emission cars, pensions, childcare and cycling
  • National Living Wage to rise from £7.20 an hour to £7.50 from April next year
  • Employee and employer National Insurance thresholds to be equalised at £157 per week from April 2017
  • Insurance premium tax to rise from 10% to 12% next June


Business:

  • Doubling UK export funding capacity
  • £400m into venture capital funds through the British Business Bank to unlock £1bn in finance for growing firms
  • The government are committed to cutting corporation tax to 17% by 2020

The State of the Economy:

  • OBR growth forecast upgraded to 2.1% in 2016 – from 2.0% – then downgraded to 1.4% in 2017, from 2.2%
  • Forecast growth of 1.7% in 2018, 2.1% in 2019 and 2020 and 2% in 2021
  • Government no longer seeking a budget surplus in 2019-20 – committed to returning public finances to balance “as soon as practicable”

Transport/Infrastructure/Regions:

  • £1.1bn extra investment in English local transport networks
  • £220m to reduce traffic pinch points
  • £23bn to be spent on innovation and infrastructure over five years
  • £2bn per year by 2020 for research and development funding
  • £110m for East West Rail and commitment to deliver Oxford to Cambridge Expressway
  • More than £1bn for digital infrastructure and 100% business rates relief on new fibre infrastructure
  • £1.8bn from Local Growth Fund to English regions
  • Rural Rate Relief to be increased to 100%, “giving small businesses a tax break worth up to £2,900”
  • £7.6m for repairs to Wentworth Woodhouse, near Rotherham, said to be inspiration for Pemberley in Jane Austen’s Pride and Prejudice

Fuel:

  • Fuel duty rise cancelled for seventh year in succession– at a cost of £850m, saving average car driver £130 and van driver £350 a year
  • For the oil and gas sector, the Carbon Price Support capped until 2020 and business rates reductions worth £6.7bn

Housing:

  • Ban on upfront fees charged by letting agents in England “as soon as possible”
  • £2.3bn housing infrastructure fund to help provide 100,000 new homes in high-demand areas
  • £1.4bn to deliver 40,000 extra affordable homes

Public Borrowing/deficit/spending:

  • Government finances forecast to be £122bn worse off in the period until 2021 than forecast in March’s Budget
  • Debt will rise from 84.2% of GDP last year to 87.3% this year, peaking at 90.2% in 2017-18
  • Office for Budget Responsibility (OBR) forecasts borrowing of £68.2bn this year, then £59bn in 2017-18, £46.5bn in 2018-19, £21.9bn in 2019-20 and £20.7bn in 2020-21
  • Public spending this year to be 40% of GDP – down from 45% in 2010
  • Departmental spending plans set out in 2015 Spending Review to remain in place
  • Government will meet commitments to protect budgets for key public services, defence, overseas aid and the pension “triple lock” until the end of this Parliament

Welfare:

  • Universal Credit taper rate to be cut from 65% to 63% from April at a cost of £700m
  • No plans for further welfare savings in this Parliament

Other:

  • Funding for 2,500 more prison officers
  • Reforms to compensation for whiplash to cut the cost of motor insurance

If you have any questions on how the Autumn Statement will affect you and your business get in touch or call 0161 249 5040