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Autumn Statement 2016

23rd November 2016

A round up of the Autumn Statement 2016 for rural businesses and landowners

Letting Agent Fees

The Chancellor announced that letting agents are to be banned from charging fees to tenants. The Department for Communities and Local Government (DCLG)  is to produce a consultation paper in due course.  While that may show the intended scope of the change, this has been discussed in terms of initial charges for preparing agreements, checking references and credit checks. This could mean more costs for the landlord and potentially higher rents for tenants if landlords decide to pass these costs on in an effort to recover them.

Business Rates

  • English Rural Rate Relief will be increased from 50 per cent to 100 per cent from 1st April 2017. (Note: This limited relief applies only to village shops which mainly sell food for human consumption, which are located in a qualifying settlement and which have a rateable value of less than £8,500.)
  • There will be 100 per cent relief from business rates for new fibre networks for five years from 1st April 2017.
  • An announcement on business rates relief in England is expected from DCLG.

National Productivity Investment Fund

£23 billion of spending is promised over this Parliament for housing, transport, digital communications and research and development in order to

– Accelerate housing supply

– Tackle congestion on roads

– Support the roll-out of full-fibre connection and 5G

– R&D including on next generation vehicles

The £23 billion figure includes:

On housing:

– £1.4 bn to deliver 40,000 new affordable homes

– £2.3 bn for a new Housing Infrastructure Fund, allocated to local authorities to provide infrastructure to help unlock private sector housing

– £1.7 bn for accelerated construction of housing on public sector land (as announced in October)

On infrastructure:

– £1.1 bn to relieve congestion on local roads

– £220 million on strategic roads to alleviate pinch points

– £390 million for low emission vehicles and renewable fuels

– £450 million for rail capacity and digital signalling

– £740 million for digital communications

On research and development:

– £4.7 bn on an Industrial Strategy Challenge Fund and to increase research capacity and business innovation

It is confirmed that a Housing White Paper will be delivered “in due course”.

Infrastructure

  • As well as the £740 million in the NPIF, a further £400 million will be made available in a Digital Infrastructure Investment Fund – to be matched by private finance – for investment in new fibre networks
  • As noted above, there will be 100 per cent relief from business rates for new fibre networks for five years from 1st April 2017.
  • The National Infrastructure Commission will have a fiscal remit to assume that spending on infrastructure will be at between 1 per cent and 1.2 per cent of GDP each year from 2020 to 2050.
  • Development funding of £27 million for the Cambridge – Milton Keynes – Oxford growth corridor and £100 million for the East-West rail line.
  • £170 million of investment in flood defence, including £20 million for new flood defence schemes, £50 million for rail resilience and £100 million for road resilience. It is not immediately clear how much of this is new funding.

Local Enterprise Partnerships – £1.8 bn will be awarded to LEPs through a third round of Growth Deals.

Income Tax and National Insurance

  • The personal allowance will increase to £11,500 from April 2017 and the higher rate threshold to £45,000. The Government commitment to raise the personal allowance to £12,500 and the higher rate threshold to £50,000 by the end of this Parliament was re-stated.
  • The National Insurance secondary (employer) threshold and the National Insurance primary (employee) threshold will be aligned from April 2017, so that both employees and employers will start paying National Insurance on weekly earnings above £157.
  • Class 2 NICs (for the self-employed) will be abolished from April 2018.
  • Income tax and NI advantages of salary sacrifice schemes will be removed from April 2017 except for arrangements relating to pensions, childcare, ultra-low emission cars and cycle to work schemes. Arrangements in place before April 2017 will be protected until April 2018 and arrangements for cars, accommodation and school fees will be protected until April 2021.
  • A consultation on the tax treatment of employer-provided living accommodation is promised for Budget 2017.

Partnerships – The Autumn Statement says “Following consultation, the government will legislate to clarify and improve certain aspects of partnership taxation to ensure profit allocations to partners are fairly calculated for tax purposes. Draft legislation will be published for technical consultation.”

The National Living Wage will increase to £7.50 per hour from 1st April 2017. National Minimum Wage rates (for those under 25) will increase from 1st April 2017 as follows:

– 21 to 24 year olds: from £6.95 to £7.05 per hour

– 18 to 20 year olds: from £5.55 to £5.60 per hour

– 16 to 17 year olds: from £4.00 to £4.05 per hour

– Apprentices: from £3.40 to £3.50 per hour

ATED – The annual charges for the Annual Tax on Enveloped Dwellings (ATED) will rise in line with inflation for the 2017 to 2018 chargeable period.

Insurance Premium Tax will increase from 10 per cent to 12 per cent from 1st June 2017.

VAT Flat Rate Scheme – A new 16.5% rate will be introduced from 1st April 2017 for businesses with limited costs, such as many labour-only businesses. Guidance which has the force of law, published today, will introduce anti-forestalling provisions.

Fuel duty – The fuel duty rise is cancelled for the seventh year.

Culture – £7.6 million of grant funding will be made available for urgent repairs to the Grade 1 listed Wentworth Woodhouse in South Yorkshire.

Timing of the Budget – In 2017 there will be both a Spring and an Autumn Budget. From 2018 onwards there will be a Spring Statement (not expected to introduce new tax changes) and an Autumn Budget.

See https://www.gov.uk/government/publications/autumn-statement-2016-documents/autumn-statement-2016

http://www.caav.org.uk/Members_Area/Members_Documents/England/Taxation/Budget/CAAV_Note_161123_The_Autumn_Statement_2016.aspx