Now that the laughter has faded since the Chancellor delivered his first Autumn Budget, with humorous references to Top Gear and cough sweets, attention turns to the measures he announced in seeking to address Britain’s lagging productivity.
As expected, it was a Budget with limited changes, reflecting the Office of Budget Responsibility’s downgrading of economic forecasts and uncertainty surrounding the ongoing Brexit negotiations. Mr Hammond, however, announced the need to invest now to grow our economy for tomorrow, revealing plans to spend nearly £25bn on a range of measures.
For Northern Ireland, there was a welcome announcement of an additional £650 million for the Northern Ireland Executive to invest in future infrastructure projects here. Additionally, reviews to the VAT rate applied on tourism activities (currently 20% in NI compared to a 9% rate which applies in the Republic of Ireland) and Air Passenger Duty rates were announced, with further updates expected next Autumn.
The Chancellor put tackling the housing crisis at the heart of the Budget, pledging moves to build more homes and to help more young adults on the property ladder by cutting stamp duty for first-time buyers on purchases up to £300,000.
One of the other key focuses was the support for innovation, with those businesses benefiting from the Research and Development Expenditure Credit (mainly available to large companies) increasing from 11% to 12% for ‘qualifying expenditure’ incurred on or after 1 January 2018. There were also pledges of investment in technology for driverless cars, zero/low emission vehicles and a 5G network.
Whilst it was disappointing that the VAT system was not simplified, to allow for a reduction in administration for small businesses, the threshold for VAT registration was frozen for the first time in nearly 30 years at £85,000 until 2020 following fears of a potential threshold decrease.
From 1 January 2018, the indexation allowance will no longer be available for companies disposing of capital assets and aligns the capital gains calculation to that for individuals. Companies will no longer receive relief for any increase in an asset’s value due to inflation although individuals can still avail of the annual capital gains increase to £11,700 from April 2018.
Finally, as with all recent budgets, there were further anti-avoidance measures announced which are expected to collect a further £4.8 billion over the course of the next four years. This includes introducing a requirement to notify HMRC of the creation of certain offshore structures, which can be used to avoid tax and collection of withholding taxes on royalties which are paid to to low/non taxing jurisdictions.
With two budget announcements in 2017, there is a much needed break until next year’s Autumn Budget. In the meantime, if you or your business wish to discuss any of the changes announced please do not hesitate to get in touch.