Autumn Statement: What’s in store
The next two weeks are going to be a busy time for those interested in tax policy.
On 23 November Chancellor Philip Hammond will present his first Autumn Statement.
Just under two weeks later on Monday 5 December, some detailed draft clauses for the 2017 Finance Bill will be released on what Whitehall insiders now call “L-Day”.
AccountingWEB will be paying close attention to these developments and offers the following pointers to what might or might not happen.
Political and economic outlook
The Chancellor is going to have to address the costs of Brexit, as according the consensus of independent economic forecasts reported in the FT, the UK faces a £100bn Brexit hole in its public finances. The Autumn Statement is thus likely to concentrate on spending plans, and tax raising, or revenue acceleration initiatives.
Theresa May has promised to help families who are “just about managing” (Jams), so will want to see something for jams tomorrow from the Treasury. The PM’s promise could be translated into another tiny tax relief which makes a good sound bite, but is ridiculously complicated to apply - just like the marriage allowance.
The government may want to divert attention from its Brexit confusion by announcing some big infrastructure programmes, and perhaps a few smaller projects which can be achieved in a shorter period. Renewing the Oxford to Cambridge railway connection, which was broken in 1967, is a potential example.
The CIOT and IFS have called for more a sedate, less headline-grabbing approach to policy formulation; leaving the Autumn Statement as a spending review statement and focusing legislative announcements on the spring Budget instead. In fact Philip Hammond has indicated that he would prefer only one big setpiece a year, so this may be the last Autumn Statement in this form we see for a few years.
But right now Hammond has a large pile of tax-related decisions on his desk - feedback from more than 30 consultations undertaken over the summer.
And guess which topic comes top of the pile, with more than 3,000 responses?
Making Tax Digital - will he, won’t he?
Within the tax profession the most hotly anticipated announcements and legislation will be around HMRC’s Making Tax Digital plans. If the department is going to hit its timetable to go live from April 2018, the draft Finance Bill clauses will need to be released pretty soon to allow enough time for consultation, preparation and software testing.
But moves in this direction are likely to provoke considerable outrage from accountants and small businesses. That’s the last thing Theresa May wants, so if the Chancellor does plan to press on with MTD, he may neglect to mention it in his speech.
If, however, he wants to court some public acclaim, he could gain almost universal approval by acknowledging calls from the profession and elsewhere to put back the MTD timetable by a year and link the first implementation phase to the planned date for businesses registered for VAT to join.
Other tax measures
The professional bodies have been working overtime responding to detailed tax consultations, to ensure the draft Finance Bill 2017 clauses work in the way the government intended and don’t cause any further foul-ups with unintended consequences. Among the changes we expect to see on L-Day are:
This levy on soft drinks is due to take effect from April 2018. However, the food industry is already changing its recipes to avoid the new levy, so this new tax may achieve its aim of reducing childhood obesity without raising any revenue.
The future of salary sacrifice for benefits in kind is in the balance as Kate Upcraft explained. There are also moves to change the taxable benefit charges for low emissions company cars, and reform the taxation of termination payments. Further simplifications to the PAYE settlements agreements process will be introduced and the rules for when the employee repays the employer the value of the benefit will be rationalised.
This term refers to individuals and businesses who hide completely from the tax system. HMRC will have the power to gather bulk data from money service businesses, such as cheque cashers and currency exchange services, to track cash which is not being declared as earnings. Another tool to track non-compliant businesses is to make any licences, such as to sell alcohol, conditional on the business being registered with HMRC.
No Budget or Autumn statement would be complete without the announcement of a raft of tax avoidance measures. We should expect more detail on:
Tax charges to discourage disguised remuneration including a charge on employee loans which have not been repaid by 2019 and were legal at the time they were advanced
The remittance basis used by non doms will restricted to individuals who were born outside of the UK and who have been tax-resident in the UK for less than 15 years
Autumn Statement on AccountingWEB
Between now and mid-December, AccountingWEB’s editorial and community team will be busy monitoring GOV.UK and professional reactions to any tax or regulatory measures that come forward. If you want to keep up with the machinations, join us of any or all of these initiatives:
Philip Fisher column - Autumn Statement thoughts for the Chancellor
CoverItLive panel with BusinessZone during the Autumn Statement speech (12:30pm on 23 November)
News and analysis of any measures that appear on 23 November
Detailed summary of main L-Day released after 5 December and analysis from AccountingWEB contributors and bloggers
PracticeWEB's Autumn Statement report
- Autumn Statement/Finance Bill 2017 at a glance summary