Autumn Statement Views

 

 

The autumn statement produced little that was of  interest from a tax perspective for our Tax Director Mary Tierney, as the majority of the “news” was essentially a restatement of items already presented in earlier budgets. 

  

Mary also noted:

 

We had the “harsh on tax evasion, avoidance and aggressive tax planning” warnings, that are becoming the norm, although it still concerns me to hear tax planning (even if aggressive) and tax evasion in the same sentence. 

 

There was one statement in the speech that made me sit up and take notice:

technological progress is changing the way people live, and the way they work;

The tax system needs to keep pace. For example, the OBR has today highlighted the growing cost to the Exchequer of incorporation.

So the government will consider how we can ensure that the taxation of different ways of working is fair between different individuals, and sustains the tax-base as the economy undergoes rapid change.

We will consult in due course on any proposed changes.”

 

The bottom line here is that if we are to have a corporation tax rate as low as 17% and a top income tax rate of 45%, in many circumstances incorporation is attractive and can reduce tax burdens.  There are many routes a consultation (such as that proposed) could consider, I would not be surprised to see increased rates of corporation tax for investment companies, or some way to bring dividends into an employment income type charge.  Maybe I am being unduly concerned, but I await this consultation with interest.

 

Finally Philip Hammond teased us that he was going to resign, before then announcing a switch in emphasis  between the autumn statement and the budget.   It makes sense to return to one major fiscal event per year (i.e. the time when he announces tax changes), although it does mean we will have two major fiscal events next year, the last normal spring budget, and the first new autumn budget – no doubt we’ll also have two 2017 finance bills as a special treat too !

 

 

If you have any concerns on issues raised in yesterday's statement by the chancellor, or on any other tax matters please do not heistate to contact Mary on mary.tierney@bennettbrooks.co.uk or call her on 01606 721300