“Preparing our economy to be resilient as we exit the EU” was the Chancellor, Philip Hammond’s aim for his first (and last!) Autumn Statement – the main fiscal event will move to the autumn with a Spring Statement from 2018.
Certainty and stability were key factors noted as highly valued by business and the Chancellor has looked to create these by confirming the government’s commitment to their existing ‘business tax road map’. His statement focussed on investment in infrastructure and innovation, with monies allocated for research and development, homebuilding and transport.
Welcome news for Northern Ireland, was the announcement of an additional £250m (over four years) to the NI Executive’s budget enabling in key infrastructure projects, aimed at boosting productivity and promoting growth.
Sharing in the £4.7bn increased funding for research and innovation and the £0.7bn further investment to support full-fibre connections and future 5G communications, will directly benefit Northern Ireland, ensuring that businesses here are best placed to take advantage of the opportunities presented by such investments.
Whilst families and ordinary working individuals will benefit from a rise in the National Living Wage and freeze on fuel duty, employers are impacted further by the alignment of the employer and employee national insurance costs. Whilst this is expected to raise revenues for the Treasury, employers will be less likely to offer perks such as mobile phone contracts and gym membership etc.
No reduction in the main rate of UK corporation tax is to be welcomed locally, as the introduction of a 12.5% rate of NI corporation tax in April 2018 may still be seen by many to be a differentiator which could drive additional investment. It was also announced that the NI Corporation Tax regime is to be amended in the Finance Bill 2017, to give all small and medium sized enterprises (SMEs) trading in Northern Ireland the potential to benefit.
Some of the key tax announcements are listed below:
- corporation tax rate reduction to 17% by 2020 remains, but changes to interest deductibility and loss relief provisions to be implemented;
- tax and National Insurance advantages of certain salary sacrifice schemes to be removed from April 2017; and
- alignment of employees and employers NIC from April 2017.
- personal allowance increases to £11,500 (currently £11,000) next year and the higher rate threshold to £45,000 (currently £43,000);
- the ISA limit will increase from £15,240 to £20,000 from April 2017;
- a new income tax allowance was announced for trading and property income whereby individuals with trading or property income below £1,000 will no longer need to declare or pay tax on that income;
- reforms to the taxation of individuals domiciled outside the UK will go ahead as planned from April 2017; and
- government support for savers through provision of a new 3 year savings bond in spring 2017.