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A B C D E F G H I J K L M N O P R S T V W Y

Autumn Statement 2016: A look at the key tax changes for businesses

Autumn Statement 2016: A look at the key tax changes for businesses

Thursday 24th November 2016

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Corporate Matters - Issue 15

The Autumn Statement is the Chancellor of the Exchequer’s first major fiscal event since the “Brexit” referendum earlier this year. From next year, the Autumn Statement will become the new single annual Budget, announcing tax changes well in advance of the start of the following tax year. There will be a new “Spring Statement” from 2018, however it will not include any tax or policy changes.

The Chancellor confirmed a number of earlier government announcements in relation to tax, particularly those announced at the 2016 Budget, and there were relatively few surprises.

Some of the key announcements include:

  • Following consultation, the tax and NIC advantages of certain Salary Sacrifice arrangements will be abolished from April 2017. However, arrangements involving pensions, childcare, Cycle to Work and low-emission cars will continue to benefit from tax and NIC advantages. Salary Sacrifice arrangements in place before April 2017 will be protected until April 2018 (and arrangements in relation to cars, accommodation and school fees will be protected until 2021).
  • The tax advantages linked to Employee Shareholder Status (ESS) shares will be abolished from 1 December 2016. Given that ESS rules require employees to be provided with at least 7 days’ notice to consider such arrangements, the abolition of ESS is effective immediately (save for those arrangements where the employee consultation process is already underway).
  • The government will introduce a new 16.5% VAT flat rate scheme from 1 April 2017 for businesses with limited costs (such as “labour-only” businesses). The move is intended to counter “aggressive abuse” of the existing flat rate scheme. Anti-forestalling rules will also apply.
  • Following consultation, “off-payroll” working in the public sector will be reformed from April 2017 by moving the compliance responsibility to the public sector body that is paying the worker’s company.
  • The government has announced a wide-ranging consultation on different forms of “worker” remuneration. This will look at different working arrangements, as well as the taxation of benefits in kind and expenses.
  • Following consultation, the government has announced that with effect from April 2017 the existing “substantial shareholding exemption” (SSE) rules will be reformed to simplify and extend the exemption.
  • The standard rate of insurance premium tax (IPT) will increase to 12% from 1 June 2017.
  • Following consultation the tax deductibility of interest payments, and tax relief for carried forward losses, will both be restricted with effect from April 2017. Both of these changes will only impact larger business and corporate groups.

If you like to discuss any specific issues relating to the Autumn Statement or for any other corporate matter please contact us.

Partner, Corporate
Tel: 0151 600 3269