The final autumn statement – is it good news for business taxes?
No more Budgets! Well, not in the spring that is, after the chancellor announced that he has decided to move them to the autumn in future, with next year’s Budget being the last one in March.
That is good news as we now only have one period of major tax change in the year, as well as advance notice of any implementation, rather than what was increasingly becoming two Budgets.
Effectively, it means this is the last Autumn Statement commentary, but is its content good news for business tax?
Good news for employees
A halt has been put on the tax advantages from new Employee Shareholder Status share schemes. Originally introduced by the government in 2013 for businesses to use to incentivise and retain their key staff, they are not fulfilling their purpose. However, other time-served share schemes remain available, such as the Enterprise Management Incentive Scheme.
The National Living Wage (NLW) will increase from £7.20 to £7.50 an hour from April 2017, which will provide a £500 a year increase to a full-time employee already on the NLW. The NLW is paid to employees aged 25 or over, and who are not in an apprentice scheme. It is good news for those employees, but how will businesses decide to deal with those extra costs, plus the further scheduled increases in NLW?
For expenditure from today, 100 per cent capital allowances are available on capital expenditure on electric car recharge points, either new or used. However, the majority of SMES usually see their qualifying capital expenditure covered each year by the usual Annual Investment Allowance in any case, so the new allowance will only be an advantage in some cases.
We already knew from previous Budgets that the corporation tax rate was being reduced to 19 per cent from April 2017, and again to 17 per cent from April 2020. Against some noises about further reductions because of Brexit, the chancellor has now confirmed no change from the existing planned reductions.
The Chancellor also confirmed pre-announced restrictions on corporate tax relief for interest costs, and loss relief. The majority of businesses will be unaffected, but those with high interest costs (>£2m plus >30% of UK earnings), or losses of more than £5 million in a year, will need to plan for these changes.
To find our whether your business will be affected by the Autumn Statement and for advice on a range of other tax matters, please contact Rob Durrant-Walker or Garbutt + Elliott’s dedicated team of business tax experts at firstname.lastname@example.org.