Autumn Statement 2016: the highlights

The Headlines and Highlights of the 2016 Autumn Statement.

Capital allowances

From 23 November 2016 a 100% first-year allowance (FYA) for expenditure incurred on electric charge-point equipment.
New charging stations will be required.
See New FYA for charge-points.

VAT: Flat Rate Scheme

Anti-forestalling measures apply ahead of April 2017 changes to the VAT Flat Rate Scheme (FRS) that will add a new 16.5% VAT flat rate percentage and restrict the benefits of the ERS for low cost businesses.
See Autumn Statement 2016: VAT.

Employee Shareholder share schemes

The previous chancellor's share scheme loses its tax advantaged status for income tax and CGT for schemes starting on or after 1 December 2016.
See ESS: tax benefits axed.

Income tax, reliefs and personal allowances

Personal allowances: these rise for 2017/18 (as previously announced). The aim is to raise the personal allowance to £12,500 and the higher rate threshold to £50,000 by the end of this Parliament.
The 'Uber' tax allowance: a new £1,000 allowance for small property or trading income is re-confirmed: how this fits into the Making Tax Digital exemption limits and plans to clamp down on cash economy will be confirmed later.
Social Investment Tax relief: has new investment limits from April 2017, they increase to £1.5 million. Other changes will be made to ensure that the scheme is well targeted. Certain activities, including asset leasing and on-lending, will be excluded.
National Insurance (self employed): the self-employed contributory benefit will be accessed through the much higher rates paid for Class 3 and Class 4 NICs.
NICs and the Limitation Act: From April 2018, the government will remove NICs from the effects of the Limitation Act 1980 and Northern Ireland equivalent.

Savings & pensions

The ISA limit increases from £15,240 to £20,000 in April 2017.
A new NS&I account will be open to those aged 16 and over will be available for 12 months from spring 2017.
The pensions Money Purchase Annual Allowance will be reduced to £4,000 from April 2017.
The tax treatment of foreign pensions will be more closely aligned with the UK’s domestic pension tax regime.

Employers and Employees

Termination payments: from 2018 payments over £30k subject to ERS NICs (as pre-announced). NEW: Tax applied to the equivalent of an employee's basic pay if their notice is not worked.
Employee legal expenses: from April 2017 employees no longer pay tax on legal support from their employer.
Salary sacrifice: tax and employer National Insurance advantages of salary sacrifice schemes will be removed from April 2017, except for arrangements relating to pensions (including advice), childcare, Cycle to Work and ultralow emission cars.
Benefits in kind: consultation on the valuation of benefits in kind
Company cars: new, lower bands will be introduced for the lowest emitting cars. The appropriate percentage for cars emitting greater than 90g CO2 /km will rise by 1 percentage point.
PSAs to be removed.
New Van benefit rates.
Employee Shareholder Status shares: Income Tax and CGT advantages are removed for schemes entered into after 1 December 2016. Shares received under agreements made before that date are not affected.
National Living Wage and National Minimum Wage rates: go up: by 4.2% from £7.20 to £7.50 from April 2017.
National Insurance (employees): both employees and employers will start paying National Insurance on weekly earnings above £157 from April 2017.
IR35 and off-payroll working rules: responsibility for PAYE and NICs moves to the engager for PSCs working in the public sector from April 2017. NEW: the 5% tax-free IR35 allowance will be removed for those PSCs.

Offshore and non-doms

Non-domiciled individuals: from April 2017 inheritance tax will be charged on UK residential property when it is held indirectly by a non-domiciled individual through an offshore structure, such as a company or a trust.
Business Investment relief: a change from April 2017 to make it easier for non-domiciled individuals who are taxed on the remittance basis to bring offshore money into the UK for the purpose of investing in UK businesses.
Offshore avoidance: a new consultation on a new legal requirement for intermediaries arranging complex structures for clients holding money offshore to notify HMRC of the structures and the related client lists.

Companies

Large companies from April 2017 new rules to limit the tax deductions for interest for large groups. 50% restrictions on loss relief with greater flexibility as to use of losses.
Small Companies from April 2017: IR35 to no longer apply to public sector engagements and the 5% tax-free IR35 allowance will be removed. Greater flexibility on how losses are relieved without the large company 50% restriction.
Non-resident companies: consultation on new proposals to bring all non-resident companies receiving taxable income from the UK into the corporation tax regime.
SSE exemption from April 2017: simplification by removing the investing requirement and adding some more comprehensive exemptions.
R&D: a review of the tax environment for R&D and introduction of the ‘above the line’ R&D tax credit.

VAT

VAT Flat rate scheme: a new 16.5% VAT flat rate percentage for businesses with limited costs which will take effect from 1 April 2017. Anti-forestalling legislation was published on 23 November 2016.
VAT groups: Consultation on VAT grouping.
VAT on adapted cars: Measures to tackling exploitation of the VAT relief on adapted cars for wheelchair users.
Retail export scheme: New funding with a view to digitising fully the Retail Export Scheme to reduce the administrative burden to travellers.
New VAT review: the Office of Simplification to make a review of the cuurent method of applying VAT on goods and services.

Inheritance Tax (IHT)

From Royal Assent of the Finance Bill 2017/18, inheritance tax relief for donations to political parties will be extended to parties with representatives in the devolved legislatures, as well as parties that have acquired representatives through by-elections.

Tax administration

Making Tax Digital: the government will publish its response to the Making Tax Digital consultations in January 2017.
Tax Simplification: government has responded to the OTS review of alignment of income tax and NICs. The OTS to carry out reviews on aspects of the VAT system and on Stamp Duty on share transactions.
Tax Enquires: new legislation in FA 2017 will provide certainty on the closure rules.
The Budget v the Autumn Statement v Spring Statement: the Autumn Statement will become the Autumn Budget in 2017. From 2018 a Spring Statement will become the government response to the OBR's annual report.

Misc. other taxes

Tax regime for insurance linked securities (ILS): this measure forms part of wider work to establish the UK as an attractive base for insurance special purpose vehicles (ISPVs) issuing ILS.
Sugar tax: Soft Drinks Industry Levy: draft legislation for the Soft Drinks Industry Levy will be published on 5 December.
Insurance Premium Tax: this will rise from 10% to 12% in June 2017.
Business rates: to remove the inconsistency between rural rate relief and small business rate relief the government will double rural rate relief to 100% from 1 April 2017.

Non-tax highlights for business