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The Autumn Statement 2016
23 November 2016
The Chancellor Philip Hammond has abolished the Autumn Statement. He said that no other country makes major tax changes twice every year.
So, the Spring Budget 2017 will be the last, and there will be a second Budget before the end of 2017 to switch to the new timetable. We will then move forward with an Autumn Budget. The Finance Bill will follow the Budget as it does now.
Hammond said this was long overdue reform and will help parliament to scrutinize the tax changes before the tax year where most take effect.
From 2018, under the new timetable, the day (‘Legislation day’), when most tax policy consultation summaries and draft Finance Bill legislation is published will move to the summer. For this Autumn Statement the current ‘Legislation date’ is 5 December.
There will be a Spring Statement moving forward, where the Chancellor will respond to the updated OBR forecasts for the economy and public finances.
HERE ARE THE MAIN TAX CHANGES
The government is sticking to its business tax roadmap and corporation tax will fall to 17%.
The personal income tax thresholds will be raised to £11,500 in April next year (was £11,000). The promise is by the end of this parliament it will rise to £12,500 with the higher rate income tax threshold rising to £50,000.
The National Living Wage will rise from £7.20 an hour to £7.50 from April. For someone in full time employment this will add £500 to their salary.
Employee and employer National Insurance thresholds to be equalised at £157 per week from April 2017. Hammond said that there will be no cost to employees and the maximum cost to business will be an annual £7.18 per employee.
Insurance premium tax to rise from 10% to 12% next June.
Tax savings on salary sacrifice and benefits in kind to be stopped, with exceptions for ultra-low emission cars, pension savings, childcare and cycle to work schemes. Certain long-term arrangements will be protected until April 2021.
Rural Rate relief to 100%, giving small businesses in rural areas a tax break worth up to £2,900 per year.
Closure of inappropriate VAT flat rate schemes that were put in place to help small businesses.
Tax advantages linked to Employee Shareholder Status will be abolished, due to the fact that evidence shows it is primarily being used for tax-planning purposes by high-earning individuals.
Introduction of a new penalty for those who enable the use of a tax avoidance scheme that HMRC later challenges and defeats.
Income tax bands of taxable income
2016-2017: Basic rate (20%) £0 - £32,000; Higher rate (40%) 32,001 - £150,000; Additional rate (45%) over £150,000
2017-18: Basic rate (20%) £0 - £33,500; Higher rate (40%) £33,501 - £150,000; Additional rate (45%) over £150,000.
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