“A future that will be full of change, full of challenges and above all full of new opportunities”, so said Philip Hammond, as he began reading the Autumn Budget.
But, aside from cutting stamp duty for first-time buyers or investing in electric and driverless car charging infrastructure, there seems to be minimal change for the good, a lot of challenges and scant opportunities.
The Office for Budget Responsibility (OBR) has downgraded the UK economy’s growth forecast for the next few years, to 1.5% this year, which is down from the 2% predicted in the Spring Budget, 1.4% 2018 and 1.3 in 2019-20, only expecting it to grow again to 1.5% growth in 2020.
The Chancellor has pledged to allocate £3billion for Brexit preparations over the next two years ‘to prepare for every possible outcome.’
Hammond has committed to invest an extra £2.3billion in research and development as part of the government’s Industrial Strategy, which the Chancellor said represented “The first strides towards the ambition of our industrial strategy to drive up R&D investment across the economy to 2.4% of GDP.”
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North Sea oil
Hammond has announced a tax break for transfers of North Sea oil and gas fields, from next year, offering transferrable tax histories for oil and gas fields in the North Sea.
£20billion has been promised in investment in UK knowledge and scale up businesses, to be seeded with £2.5billion of public money, and Hammond said “we stand ready to step in to replace European investment fund lending if necessary.”
Personal tax free allowance will increase to £11,850, from the current £11,000, although it was already due to go up to £11,5000. The higher threshold for tax will go up from £45,000 to £46,350.
The VAT threshold will be kept at £85,000 for the next two years, and the Chancellor said: “I will consult on whether its design could better incentivise growth and in the meantime we will maintain it at its current level of £85,000 for the next two years.”
Some key changes that business lobby groups were pushing for have come through, as it was announced that business rate revaluations are to take place every three years and the switch from using the Retail Price Index to the Consumer Price Index will be brought forward by two years, to 2018. It is thought the move is worth £2.3billion to businesses over the next five years.
The Chancellor also addressed the ‘staircase tax’ and has extended the £1000 discount to pubs with a rateable value of less than £100,000 to March 2019.
There is to be a crackdown on digital businesses that avoid tax, in response to the Paradise Papers leak.
From April 2019Companies such as Amazon, Google and Apple will have to pay royalties that are related to UK sales, even when paid to low tax jurisdiction, but it is predicted to raise just £200million. The Chancellor said: “”This does not solve the problem… …but it does send a signal of our determination.”