In his first, and last, autumn statement, Philip Hammond, bombarded us with a plethora of figures but what exactly did the Chancellor announce in today’s spending review and autumn statement?
Despite the forecast that the UK is set to be the fastest growing major economy in 2016, the Chancellor announced that the Office for Budget Responsibility (OBR) has forecast growth to slow and inflation to rise over the next two years.
The government announced that it intends to publish a consultation before Christmas in order to consider ways of tackling pensions scams including banning cold calling in relation to pensions, giving firms greater powers to block suspicious transfers and making it harder for scammers to abuse small self-administered schemes.
The Chancellor further announced that the Money Purchase Annual Allowance will be reduced to £4,000 from April 2017 and that the tax treatment of foreign pensions will be more closely aligned with the UK’s domestic tax regime by bringing foreign pensions and lump sums fully into tax for UK residents, to the same extent as domestic ones.
Salary Sacrifice Schemes
From April 2017, salary sacrifice schemes will be subject to the same tax as cash income with certain exceptions including pensions and pensions advice.
Arrangements set up before April 2017 will be protected for up to a year except for those in place for cars, accommodation and school fees which will be protected for up to 4 years.
Philip Hammond announced that in 2017 fuel duty will remain frozen for the seventh successive year, saving the average car driver £130 a year.
NS&I Savings Bond
In order to support savers, the Chancellor announced that NS&I will offer a new three year investment bond, from spring 2017, with an interest rate of around 2.2%. Savers who are 16 or over will be able to invest between £100 and £3,000.
The current tax free personal allowance is £11,000 a year but this will rise to £11,500 in 2017/2018. The point at which an individual pays higher rate tax will also increase from £43,000 in 2016/2017 to £45,000 in 2017/2018.
The Chancellor further announced that once the tax free personal allowance reaches £12,500 it will automatically increase each year in line with inflation.
National Living Wage
For those aged 25 and over, the national living wage will increase from £7.20 per hour to £7.50 per hour from April 2017. Corresponding increases will also be made to the level of the national living wage paid to apprentices and those under age 25.
The main rate of corporation tax will be cut to 17% by 2020 making it the lowest in the G20.
National Insurance Contributions
Employee and employer national insurance thresholds are to be equalised at £157 per week from April 2017.
A number of announcements were made relating to housing:
- As soon as possible, a ban will be put in place on upfront fees charged to tenants by letting agents in England.
- £2.3 billion will be available for a new housing infrastructure fund which will be used for projects such as roads and water connections that will support the construction of up to 100,000 new homes in areas of greatest need.
- £1.4 billion will be used to provide 40,000 new affordable homes, including some for shared ownership and some for affordable rent.
- An additional £1.7 billion will be used to speed up the construction of new homes on public sector land.
This is another area where the Chancellor announced a number of measures:
- £390 million will go to future transport technology including driverless cars, renewable fuels and energy efficient transport.
- £1.1 billion will be used to reduce congestion and upgrade local roads and public transport.
- £220 million will be spent tackling road safety and congestion on Highways England’s roads.
- £27 million will be used to develop an expressway connecting Oxford and Cambridge.