Cotswold-based McGills Chartered Accountants says the Chancellor, Philip Hammond, has given businesses time to plan for the future after he abolished Autumn Statements and moved the UK to a single fiscal statement to be delivered in the autumn.
The surprise announcement followed calls to reduce the number of tax changes each year and to give businesses time to put plans in place well ahead of the start of the financial year.
Under the Chancellor’s plans, there will be a Budget Statement each autumn, while the Spring Budget will be replaced with a Spring Statement, which will be a response to the Office for Budget Responsibility’s six-monthly economic forecasts.
In what will be seen as good news for SMEs, the Chancellor reiterated the government’s intention to reduce the main rate of Corporation Tax to 17 per cent by 2020 and also announced a reduction in the burden of business rates of £6.7 billion over the next five years.
As was widely trailed, investment in infrastructure featured heavily, with a total of £4.4 billion spread across transport, communications and housing.
The Chancellor also confirmed a £23 billion national productivity fund, intended to help the UK match the productivity levels found in other developed economies.
Salary sacrifice schemes which enable businesses to provide perks to their staff will be restricted to just three areas; childcare, bike to work schemes and ultra-low emissions cars. As a consequence, if businesses wish to continue offering perks such as mobile phone contracts, they will have to pay employers’ national insurance contributions.
The government’s previous commitments to raising the tax-free allowance from £11,000 to £11,500 by April 2017 and to £12,500 by 2020 were confirmed by the Chancellor, and he also confirmed that the higher rate income tax threshold will rise to £50,000 by the end of the Parliament.
A point of concern for many SMEs, however, will be the government’s future plans for the National Living Wage (NLW). The Chancellor today announced an increase in the NLW from £7.20 an hour to £7.50 an hour in April 2017. But with the previous Chancellor having promised that the NLW will rise to £9 per hour by 2020, there are now questions over whether a big increase may be in store in future years or whether the government may renege on this commitment.
Simon Nuttall, a Partner at McGills Chartered Accountants, said: “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.
“The detail of some of the Chancellor’s key announcements remains to be seen, including on the national productivity fund, which will hopefully provide assistance for SMEs. It will also likely take some time before the infrastructure spending announced today will deliver tangible benefits to businesses outside the construction sector.
“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.”