Autumn statement 2016 in review

New chancellor Philip Hammond gave his first (and last) autumn statement, which he succinctly described as, "it's complicated, but it's good news." We asked Lancashire business leaders whether they agreed.

• An end to twice-yearly announcements. The budget will now be set in autumn, with a report on progress in the spring.
• A slowing of growth, from 2.1 per cent in 2016 to 1.4 per cent in 2017.
• A £400m contribution into the Northern Powerhouse Investment Fund.
• A £23bn National Productivity Investment fund available for research, development and innovation.
• Corporation tax to reduce from 20 per cent down to 17 per cent by 2020.
• National Living Wage to increase from £7.20 per hour to £7.50 per hour from April 2017.
• Salary sacrifice benefits to be removed from April 2017, except for exempt arrangements.

“Despite reviews into modern employment being launched by the government and other bodies like PRISM, this Autumn Statement has punished contractors again. These key workers are increasingly being taxed like employees, but have none of the benefits.

"The chancellor also said the five per cent tax-free allowance would be removed as workers no longer had the administrative burden of deciding their status.

“If penalising contractors and freelancers further wasn’t enough we also as yet have had no sight of the tool that the government propose to use to assess these workers. It’s disappointing that we find ourselves again with no idea of what these changes actually mean and how, as a sector, we are supposed to work with them. The outcome of this is sure to be increased uncertainty and as a result of this is, many will leave the public sector, creating a massive skills crisis.

“Contractors should be concerned for the future. The government is continuing to squeeze the lifeblood out of this sector. HMRC are tackling the abuses of the few by applying wholesale changes and this only serves to penalise the majority who operate fairly.

“Few would have put much money on this being the last Autumn Statement, although there had been increasing calls on the Chancellor to make such a move in recent months. This is to be welcomed, however, as it will give businesses of all sizes time to plan ahead with certainty about future tax changes.

“However, notwithstanding the surprise announcement that this would be the last Autumn Statement, the Chancellor seems today to have lived up to his reputation as a low-key operator who wants to be seen as a safe pair of hands.”

Noam Handler, head of tax in the North West at EY:

“The chancellor has avoided a car crash, by exempting low emission vehicles from the £235m attack on salary sacrifice, but keeping many other benefits within his targets. He also increased the VAT flat rate scheme, providing another £195m next year, and confirmed the implementation of the off-payroll working rules in the public sector.

“As for the statement itself, we will now see a return to the November Budgets we remember from the time of Ken Clarke, taking us back 20 years. In the future, the chancellor will be able to play Father Christmas rather than the Easter Bunny.”

Martin Hall, head of compliance and risk, at ICS:

“As expected, the details were quite general and we will have to wait until 5 December when the draft legislation is set to be released to find out more. We expect to see a version of the proposed online tool in the near future which is intended to assist the engager with making that decision.

“Business was looking for reassurance from the chancellor at a time of considerable uncertainty and he has helped calm nerves with a pre-Brexit tonic pitched at the right level. He is walking a fiscal tightrope, but his pragmatic statement provides enough stimulus in key areas vital to improving productivity while holding back some fiscal firepower if, as the OBR suggests, the economy stutters.

“From now on this should be the direction of travel for future statements and policy decisions, with government using the right levers to address productivity, regional growth and housing. A commitment to keep pushing on these priorities, while addressing past under-investment in infrastructure, will send out the right message to businesses here and overseas that post-Brexit Britain really is open for business.”

Colin Tice, tax partner at Cassons:

“The North West will benefit by investment of £400m into the Northern Powerhouse Investment Fund which, in conjunction with Local Enterprise Partnerships and the British Business Bank, should release £1bn of venture capital funding into local smaller businesses, starting in early 2017.

“After a turbulent year in politics it’s refreshing to see few major business reforms on the cards. Companies need stability, especially when facing Brexit uncertainly and whether the split will be soft or hard. It’s positive that the Government is fine tuning what’s already in place and moving to an Autumn Budget that will help us plan well in advance of any changes and prevent putting the brakes on growth. The additional investment in infrastructure will also help business – particularly those based in the north. We can only hope the general upturn will compensate for the increase in the living wage, which will undoubtedly hit certain sectors.”

Sir Merrick Cockell, LPFA chairman:

"The chancellor’s first (and last) Autumn Statement delivered little by way of surprises. The main tax changes were already known about – the planned increase in the personal allowance and income tax higher rate threshold and the reduction in the rate of corporation tax and reform of corporation tax loss and interest relief rules being the key ones.

"Only time will tell how the North West will benefit from the £1.1bn extra investment in England’s local transport network; the more than £1bn for digital infrastructure; the £2.3bn to help provide 100,000 new homes in high-demand areas; the £1.4bn to deliver 40,000 extra affordable homes; and the £400m for venture capital funds through the British Business Bank to unlock £1bn in finance for growing firms. However, all are potentially positive announcements for the region.

"The announcement of consultation on incorporation, which now seems to be seen as tax avoidance, was a little concerning and could cause uncertainty for many businesses who might be considering incorporation for perfectly legitimate commercial reasons. There were a few targeted tax avoidance announcements, from a government which has already made significant strides in tackling avoidance and levelling the tax playing field. None of them should have widespread impact."

Keith Pressler, senior wealth management consultant, Taylor Patterson:

"Even though slower growth is expected the labour numbers are expected to remain steady with an increase in workers over the next few years. The expected budget surplus by 2020 is now no longer going to happen, but will be brought down as soon as ‘practically possible’, expected to be within the next Parliament.

"To end the speech Philip Hammond advised that there would be no further Autumn Statements, this would be replaced by an Autumn Budget and a Spring Statement. This will allow significant announcements to be made only once a year, unless economic conditions dictated otherwise."

Gavin Taylor, technical director, Mayes Accountants:

"There are two reasons for this, first it gives you a chance to plan for any upcoming changes with more than one to two weeks notice, secondly there is actually a chance that the changes may be finalised before they come into force allowing you to ask for and receive better advice.

“The chancellor has prioritised a pragmatic down payment on future productivity growth. His emphasis on R&D, housing and local infrastructure will help businesses in all corners of the UK to invest with greater confidence for the long-term, during turbulent times. This will be warmly welcomed.

“Reducing the frequency of fiscal events along with the commitment to stick with the tax roadmap will provide stability for businesses. Importantly, the new fiscal rules provide the government with welcome flexibility, while remaining prudent, in uncertain times.