Philip Hammond delivers an Autumn Statement to make the UK match-fit for Brexit
Our full summary of the key announcements can be found here.
The UK has experienced plenty of political upheaval this year with the EU referendum followed by a change of leadership. The Chancellor, Philip Hammond, delivered his first Autumn Statement on 23 November– which also turned out to be his last. His surprise announcement was that after two Budgets in 2017, from 2018 onwards we will have a Spring Statement and an Autumn Budget.
The Chancellor presented his Autumn Statement against a background of reduced growth forecasts and the ‘urgent’ need to tackle the long-term weaknesses of the UK economy. His declared ambition is to make UK ‘match-fit’ for Brexit.
The emphasis of the Chancellor’s speech was on increased infrastructure spending, a stop on further new welfare savings measures and an acceptance that government borrowing will be significantly higher than previously projected.
The key points of the Autumn Statement are:
- Salary sacrifice schemes The tax and NIC advantages of most salary sacrifice schemes will be removed from April 2017 as previously proposed, but there will be some transitional protections. Arrangements relating to pensions will not be affected.
- The pensions money purchase annual allowance (MPAA) will be reduced from £10,000 to £4,000 from April 2017. This limit applies to people who have accessed their pensions flexibly and under the current rules may be obtaining tax relief on up to£10,000 of recycled pensions income.
- Foreign pensions and lump sums of UK residents will be fully taxed to the same extent as their domestic equivalents. Specialist pension schemes (s.615 schemes) for people employed abroad will be closed to new saving. There will also be other significant changes to the tax rules for pensions of people who move overseas.
- The tax changes for non-domiciled individuals will proceed as planned from April 2017.
- Corporation tax The government renewed its commitment to reduce the rate of corporation tax to 17% by 2020. It will also limit the tax deductions that large groups can claim for UK interest expenses from April 2017.
- Insurance premium tax will be increased from 10% to 12% from 1 June 2017.
- Anti-avoidance and evasion provisions were plentiful as usual, including a new legal requirement to correct a past failure to pay UK tax on offshore interests within a defined period of time. There will also be consultation on a new requirement for intermediaries who arrange complex structures for clients holding money offshore to notify HM Revenue & Customs (HMRC) of those structures and to provide lists of clients.
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