Philip Hammond has said £2bn could be raised through a new clampdown on tax evasion, avoidance and aggressive tax planning.
TAX
Hammond clamps down on tax evasion.
The measures will include a new penalty for lawyers and accountants who enable the use of avoidance schemes later found to be improper. Frank Haskew, head of the ICAEW, said: “The Government needs to ensure any new rules are properly targeted [to ensure reputable professional advisers are not] caught in the crossfire when advising on legitimate tax planning, while the real targets escape any penalty." Mr Hammond also confirmed that the Treasury would press ahead next April with cuts to tax breaks for corporate debt and restrictions on loss relief set to raise more than £5bn from the UK's largest businesses. The tax benefits of using “disguised remuneration” schemes will also be removed by 2022 and a new legal requirement to correct any past failures to pay UK tax on offshore holdings was announced.
Reported in: Evening Standard, Financial Times, The Guardian, The Times
Government stays course on income tax thresholds increases
The Government kept to its existing plan in the Autumn Statement as it increased income tax thresholds. For the 2017-18 tax year, the personal allowance will rise from £11,000 to £11,500 and the higher-rate income tax threshold will rise to £45,000. Philip Hammond indicated the thresholds will rise again, to £12,500 and £50,000 respectively, by the end of the current parliament in 2020.
Reported in:The Daily Telegraph, The Times, Daily Mirror, The Independent, Daily Express
Corporation tax lowered
During his Autumn Statement, the chancellor Philip Hammond revealed that corporation tax would fall to 19% from April 2017 and 17% rate by 2020. He said: “My priority as Chancellor is to ensure that Britain remains the number one destination for business – creating the investment, the jobs and the prosperity to protect our long-term future.” Mr Hammond said the tax rate of 17% will be “by far” the lowest in the G20. He pointed out that the Government has already cut tax from 28% to 20% since 2010, which he says sends the message that “Britain is open for business”.
Reported in: The Daily Telegraph, The Times, Daily Mirror, The Independent
No business rate overhaul
The Telegraph reports that Philip Hammond has come under fire from some businesses for opting not to use his Autumn Statement to overhaul the business rates system. The chancellor said rate rises would be capped next year to just 43% rather than 45%. Mr Hammond also re-announced a move to reduce business rates by £6.7bn via the exclusion of smaller properties from the system.
Reported in: The Daily Telegraph, Independent, I, The Times
OUTLOOK
Europe’s failure to grow is greater threat than Brexit
The IMF has said Europe’s failure to heal divisions over fiscal and monetary policy and improve growth is a greater concern for global stability that Brexit. David Lipton, the deputy head of the IMF, added that Britain would need to embrace a global trading strategy if it wished to prosper in a post-Brexit environment. Meanwhile, a survey of more than 1,000 businesses by software provider Advanced has found that British firms are woefully under-prepared for Brexit, with only 12% ready to deal with any changes emerging from the EU referendum. The report added that 60% of firms believe they will be forced to make budget cuts, but two-thirds have made no provision for them.
Reported in: The Daily Telegraph, The Times
LENDING
Crowdfunding creates level playing field
A study has found that women are more successful than men at crowdfunding campaigns. The review of more than 440,000 campaigns last year revealed that 24% of those led by women reached their investment targets compared with 19% of campaigns led by men. Barry Smith, founder of the Crowdfunding Centre, said crowdfunding meant women could avoid the "white middle-aged men in grey suits" who…give women less than 10% of investment money.
Reported in: The Times
FINANCE
Appeals system could cost SMEs £700m
A proposed new business rates appeal system has been slammed by business groups representing SMEs, retailers and pubs. They say a provision in the appeal regime, known as Check, Challenge, Appeal, could cost businesses £700m in overpayments over a five-year ratings cycle. The “reasonable professional judgment” provision would mean ratepayers will not be able to argue against a rates bill if its margin of error was inside 15%. Research shows some firms could be pushed above the exemption criteria by a 15% margin.
Reported in: The Sunday Telegraph, The Mail on Sunday, Sunday Express
Brussels considers Chapter 11-style bankruptcy regime
The European Commission has announced plans to create a version of the US Chapter 11 bankruptcy system to ensure viable companies are given a second chance.
Reported in: Financial Times
INVESTMENT
Government review to address lack of long-term capital investment
Theresa May announced that the Government would be undertaking a review of long-term investment into British firms. The Patient Capital review, to be led by the Treasury with Sir Damon Buffini, the former head of the private equity house Permira, as chair, “will examine how we can break down the obstacles to getting long-term investment into innovative firms,” Mrs May said.
Reported in: The Daily Telegraph
EXPORTS
Chancellor doubles Export Finance funds
Keen to provide greater support, Chancellor Philip Hammond has pledged to double Export Finance funds, taking total risk appetite to £5bn. Mike Cherry at the FSB, said: “The doubling of export finance is vital as we need to reach new markets in the wake of the Brexit decision." Terry Scuoler, chief executive of the EEF manufacturers’ organisation, added: “A commitment to keep pushing on these priorities, whilst addressing past under-investment in infrastructure, will send out the right message to businesses here, and overseas, that Britain really is open for business post-Brexit.”
Reported in: Real Business, The Daily Telegraph, The Times
MANUFACTURING
Manufacturers enjoy strong order books despite Brexit vote
Manufacturers have posted their best month for orders since before the Brexit vote. For November, manufacturing order books improved but export order books and output growth eased, according to the CBI’s latest Industrial Trends Survey. Almost a quarter (23%) of manufacturers reported total order books to be above normal, and 26% said they were below normal, giving a balance of -3%.
Reported in: The Guardian, City AM, The Times
Car production goes into reverse
Car production fell for the first time in 14 months in October because of a drop in domestic demand, according to industry figures. The Society of Motor Manufacturers and Traders (SMMT) said 151,795 vehicles were produced - down 1% on October 2015. It put the reduction down to past manufacturing for the UK market being unsustainable, adding that a fall had been expected for that reason and it was unlikely to reflect fears of a slowdown in the economy following the Brexit vote.
Reported in: The Times, Daily Express
REAL ESTATE
Autumn Statement gives extra £3.7bn for housing projects
New spending on housing projects totalling £3.7bn in England has been announced by the Chancellor, with £2.3bn alone to be spent on housing development-related infrastructure. The government has also pledged to spend an extra £1.4bn on affordable housing in England, with local authorities able to bid for the money under one of three existing schemes: affordable rent, shared ownership or rent-to-buy. Mark Hayward, managing director of the NAEA, said the measures “go some way to making the housing market work for everyone” but the Chancellor’s pledges “quite frankly do not go far enough.” Meanwhile, the Office for Budget Responsibility said some policies in the Autumn Statement would increase housebuilding but that others would reduce it further still, with the overall effect being a 0.2% fall in residential investment growth.
Reported in: BBC News, Financial Times, The Times, The Daily Telegraph, The Guardian
CONSTRUCTION
House building contracts surge
According to analysis from Barbour ABI the amount paid for house-building contracts has reached the highest level since 2010. The value of contracts signed in October reached £2.3bn, up 33.4% on September and 5.7% on the total for October 2015. The number of homes contracted to be built was up 9.3% in October compared to September, with a 12% increase in the number of homes contracted to be built by housing associations. The report shows that the value of contracts awarded in the infrastructure, industrial and leisure and retail sectors declined both month-on-month and in comparison to last year.
Reported in: The Daily Telegraph
EMPLOYMENT
Workers bullish on job security
A study by Lloyds Bank has found that 82% of Britons felt confident in their job security in October, as unemployment hit its lowest rate in 11 years. The figure is up from 80% in September and by 78% a year ago; however, only 47% feel positive about the current pace of inflation while 53% are concerned about price rises. “Whilst people remain relatively assured about their own job prospects, other pressures in the economy are starting to weigh more heavily on future expectations," said Robin Bulloch at Lloyds Bank.
Reported in: The Daily Telegraph
START-UPS
Boost for tech welcomed
The Government has set out plans to inject an additional £400m into VC funds through the BBB, leading to £1bn of new financing for start-ups. Additionally, the Department for International Trade will provide half a million pounds for fintech specialists while the government will also undertake a “State of UK Fintech” report to guide investor decisions in the industry. The FSB welcomed the chancellor's decision and TechUK, the lobby organisation for Britain's technology industry, said that it was vital in the wake of Brexit.
Reported in: The Times, Daily Mail
ECONOMY
Hammond aims to make economy “match fit” for Brexit
The UK economy is resilient and Britain will be the fastest growing major economy this year, the chancellor said. In his Autumn Statement Philip Hammond said growth predictions had been cut as a result of the Brexit vote. Presenting the Office for Budget Responsibility's forecasts, he said borrowing would hit £68.2bn this year and £59bn next year, compared with the March forecast of £55.5bn and £38.8bn. The OBR said the referendum result meant potential growth in the current Parliament would be 2.4% lower than forecast in March. Government finances are forecast to be £122bn worse off than in the spring. However, Economists for Brexit said the OBR had "assumed a pessimistic outlook for the UK economy outside the EU, based on bad economic policy-making". Mr Hammond told MPs the UK's deficit would no longer be cleared by 2020 - with the target instead "as early as possible" afterwards. He said the UK needs to be "match fit" with a resilient economy for the challenges of leaving the EU.
Reported in: Financial Times, The Daily Telegraph, The Times, Daily Express, The Guardian
TECHNOLOGY
Firms keep innovation in sight despite Brexit
New research from the CBI shows that the majority of UK businesses are planning to increase or maintain their spending on innovation despite the uncertainty following the EU referendum vote. The CBI’s survey of 800 firms found that 70% were not scaling back their innovation plans, while only 7% planned to reduce such investment. The survey also found that firms see the Brexit talks as pivotal to their innovation in the future, citing access to skills and the free market as key priorities.
Reported in: The Daily Telegraph, Daily Express, The Scotsman
OIL & GAS
No new support for oil and gas sector
The government will continue to deliver its pre-existing commitments to the North Sea oil and gas industry, but the chancellor has not made any major new pledges to boost the sector in his Autumn Statement. Although no significant new tax relief or financial boosts were announced, the Treasury said steps will be taken to “simplify the reporting process and reduce the administrative costs of petroleum revenue tax for oil and gas companies”.
Reported in: City AM
