Was the Autumn Statement good, bad or pointless?
There was a lot of hype before the Autumn Statement, Philip Hammond’s first (and last) Autumn Statement as Chancellor. Some of the chatter was about JAM, but what is JAM? JAM is a turn that been used to describe people on tight budgets, the Just About Managing people. Now, if you’re a business owner I’m sure you’ve been there or maybe you still are? So, in the wake of Brexit pressure groups wanted to know what was the Government going to do to help the increasing number of JAM’s?
The BAD news
First of all, let’s look at the doom and gloom. Hammond announced that Government finances are forecast to be £122bn worse than previously predicted up to 2021. Debt will rise to a shocking 90.2% of GDP, while public spending will be down to 40% (previously 45% in 2010).
Is BREXIT effecting the economy?
There were predictions of the UK falling of the economic cliff and into the abyss if there was a pro-leave BREXIT vote. Now, we haven’t left the EU yet and in fact we’ve barely started the process to leave but there doesn’t appear to be any negative effects of the BREXIT vote yet, in fact the forecast growth for 2016 has increased to 2.1% (up from 2.0%). However, the forecast for 2017 is only 1.7% and we suspected this may be down to the uncertainly surrounding BREXIT negotiations.
The GOOD news
The good news, although not as good as we had hoped is that Corporation Tax will be reduced to 17%. But, this won’t happen until 2020. On the bright side the business tax will come down to 19% in April 2017 though, so this makes becoming a Limited Company more viable and obviously gives existing companies a nice saving too.
However, there was no mention of the 15% Corporation Tax that George Osborne announced just before the escaped No.11, so we’ll be watching the Spring Budget with eager anticipation to see if there are any changed to come. After all, Theresa May did announcement at the CBI that the UK will have the lowest Corporation Tax of the G20 countries. Donald Trump plans to reduce US Corporation Tax to 15%, plus within the EU countries like Cyrpus (12.5%), Bulgaria (10%) and Ireland (12.5%) already have enticingly low CT rates.
The National Living Wage will rise to £7.50 from April 2017, increasing from £7.20. This is great news for employees but not so great for the employers, especially as the Chancellor confirmed that the personal tax free allowance will increase to £11,500 in April 2017.
There is potentially a kick in the teeth to some employees though. New restrictions will be put in place on salary sacrifice schemes, they can now only be rolled out for ultra-low emission cars, pensions, childcare and cycling.
So, obviously tired of the dull or doom and gloom the Chancellor decided to lighten to mood in the House. He announced the Autumn Statement 2016 would be his first and LAST Autumn Statement. No, he wasn’t publicly resigning he was announcing the decision to scrap the Autumn Statement and replace it with an Autumn Budget. This obviously meant an end to the Spring Budget which will become……. The Spring Statement.
If you want further details on how the Autumn Statement and tax changes affect your business, then contact one of our busy bee accountants.
Honey Bee Accounting
Carl Ford is the founder of Honey Bee Accountancy. Carl has extension knowledge of the retail and recruitment sectors which is utilised to help grow successful businesses for the clients of Honey Bee Accountancy.