Posts Tagged ‘Autumn Statement’

Philip Hammonds last Autumn Statement

Thursday, December 1st, 2016

Philip Hammond surprised MPs when he ended his Autumn Statement by saying:

This is my first Autumn Statement as Chancellor. After careful consideration, and detailed discussion with the Prime Minister, I have decided that it will also be my last.

This was quickly followed by:

Mr Speaker I am abolishing the Autumn Statement.

No other major economy makes hundreds of tax changes twice a year, and neither should we.

So the spring Budget in a few months will be the final spring Budget.

Starting in autumn 2017, Britain will have an autumn Budget, announcing tax changes well in advance of the start of the tax year.

From 2018 there will be a Spring Statement, responding to the forecast from the OBR, but no major fiscal event.

If unexpected changes in the economy require it, then I will, of course, announce actions at the Spring Statement, but I won’t make significant changes twice a year just for the sake of it.

This change will also allow for greater Parliamentary scrutiny of Budget measures ahead of their implementation.

So there we have it, from 2017, Budgets will be announced in the autumn, and economic forecasts in the spring.

Tax changes announced last week

Tuesday, November 29th, 2016

Last week, Philip Hammond presented his first Autumn Statement to parliament.

In some respects, it was a bit of a damp squid as there were no stand-out revelations. However, there were a few tax changes that are worthy of note:

Pension pot reinvestment

The over 55s have been making good use of George Osborne’s facility to flexibly access their pension savings. Many have also reinvested their pension pots in further pension arrangements and reaped the benefit of additional tax savings. To temper enthusiasm for this strategy the Money Purchase Annual Allowance (MPAA) was introduced. This effectively limited tax relief on reinvested funds to £10,000.

The government now believes this is too generous, and from April 2017 this MPAA will be reduced to £4,000.

Check with your pensions advisor to see how this change may affect your pension opportunities if you are considering, or have recently completed, flexible access to your pension pot(s).

VAT Flat Rate Scheme (FRS)

In order to curb what HMRC sees as aggressive use of the FRS, registered traders with limited costs subject to VAT may have to use a compulsory 16.5% FRS rate in place of their existing FRS rate from April 2017.

In certain circumstances, traders using FRS can make a cash “profit” from using the FRS. In particular, this benefits businesses who have low purchases of goods and overheads subject to VAT – HMRC describes these FRS users as a “limited cost trader”.

Businesses using the FRS will need to see if they are affected as continued use of the special scheme may be cash negative from April 2017.

The end of tax-free perks?

HMRC aim to limit the number of benefits provided by employers from April 2017, that are effective from a tax point of view.

The only benefits that will be exempt from the new reclassification are: pensions, pensions advice, childcare, cycle to work schemes and the use of ultra-low emission cars.

The idea is to curb the use of benefits as a means to sacrifice salary for tax perks, and save tax and National Insurance.

We may be witnessing the end of tax-free use of mobile phones and other benefits, although HMRC have said that benefits in place before April 2017 will be protected for at least one year, and in some cases, for four years.

Autumn Statement wish lists

Wednesday, November 23rd, 2016

Organisations across the UK have been publicising their wish lists for Philip Hammond’s first autumn statement later this week.

Amongst tax practitioners there seems to be a preference for increases in the Inheritance Tax threshold and the merger of income tax and National Insurance.

Northern business leaders are keen to see investment in roads and infrastructure, and incentives to invest and grow job opportunities.

There is a general consensus that we need to step up investment to improve access to super-fast broadband. Manufacturers would also like to see plant and machinery removed from business rate calculations.

Greens are hoping for investment incentives for green energy development and carbon capture.

In order to meet the increasing costs of care for the elderly, there is an expectation that a scheme will be announced to promote long term saving to meet these costs.

According to the pensions industry, less is more. They are hoping that Mr Hammond will leave them alone and resist the temptation to make the pensions’ tax rules ever more complicated.

Underlying all of these concerns is the uncertainty generated by the effects of our withdrawal from the EU. No doubt the Chancellor will aim smooth the transition, and on Wednesday this week we will finally see what number 11 is going to offer.

Autumn statement 23 November 2016

Friday, September 16th, 2016

Philip Hammond has announced the date for the Autumn Statement: 23 November 2016.

In the past, Chancellors have used the occasion to set the scene for the following years’ budgets. This year, Philip Hammond will be disclosing the fiscal direction of the new Conservative government. Are we to have evermore “austerity”, cuts in government expenditure, or will the Treasury abandon its commitment to reducing debt and balancing UK’s books?

No doubt the economic effects of Brexit will weigh heavily on the argument: can we afford to suppress economic activity if we are facing the loss of the EU single market?

All eyes will be on Philip Hammond as he rises to speak on the 23rd. A lot hangs on what he says.

Air passenger duty exemption now applies to under 16s

Monday, March 14th, 2016

Children under 16 will join under 12s in no longer having to pay Air Passenger Duty in economy class.

Families planning an Easter break will get a boost today when the cost of their foreign holidays are slashed as children under 16 will join under 12s in being exempt from paying Air Passenger Duty (APD) in economy class.

This change, which was announced by Chancellor George Osborne in the Autumn Statement 2014 and comes into effect from 1 March, would offer a saving of £142 to a family with two children under 16 travelling to long-haul destinations such as Florida, and £26 off a holiday in Europe.

The change will also act as a boost to international tourism – worth more than £26 billion a year to the UK economy. Foreign visitors will also see the benefit and with people from Australia and the USA being some of the UK’s most popular visitors, it is hoped the potential savings will prove an incentive for even more families from far-flung countries to visit the UK.

Exchequer Secretary to the Treasury, Damian Hinds said:

This government is pleased to make travel easier and more affordable for working families. Aviation plays a key role in our economy and in the midst of a volatile economic outlook it is crucial we help families where we can. As passengers flying to the UK from abroad will also see the benefit of this exemption I hope it proves an incentive to families abroad to enjoy this country’s own world-leading tourism industry.

According to the latest ONS Travel Trends statistics, the USA is the third most visited country for UK residents. With average spend per day by Brits continuing to be the highest for trips to North America at £82, the APD saving for long-haul flights will effectively pay for almost two days of a two child family’s holiday.

The top 5 countries visited by UK residents have remained consistent since 2010. Spain continues to top the list in 2014 at 12.2 million visits, a 5.4% increase from 2013. Residents of the USA were the third most popular visitors to the UK, increasing by 7.1% to 3 million.

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