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Categorized | Property

Autumn Statement 2016: summary and key points

Posted on November 23, 2016

Chancellor Philip Hammond has presented his first Autumn Statement to the House of Commons, setting out the Conservative government’s plans for taxes, spending and borrowing as the UK prepares for Brexit.

This will also be his last, as Mr Hammond announced the Budget will now be in the autumn. There will be a simplified Spring Statement from 2018 onwards.

Economy and the Brexit effect

Revised economic forecasts
Mr Hammond praised the “strength and resilience” of the UK economy since the Brexit vote, but announced a cut to growth forecasts as he prepared Britain for the impact of leaving the EU.

He confirmed the government was no longer seeking to deliver a surplus in 2019-20.
Brexit Britain to borrow extra £23bn

Forecasts for public sector debt increased
In 2020-21, public sector net borrowing is now forecast to be £20.7bn; in March the forecast was for an £11bn surplus.
Three takeaways as OBR puts a cost on Brexit

Public sector net debt is also forecast to be higher: it will now continue to rise as a share of GDP, peaking at 90.2 per cent in 2017-18.

Bank bailouts
Losses to UK taxpayers for bailing out some of the largest high street banks during the financial crisis will rise by £9bn to £27bn after their share price dropped on the Brexit vote, according to the Office for Budget Responsibility.
For the full story click here

Infrastructure spending
Mr Hammond said raising productivity was “essential” and announced a £23bn national productivity investment fund to spend on infrastructure including new housing and research and development over the next five years.

The focus on infrastructure also included a five-year exemption from business rates for companies installing new fibre-optic cables. The telecoms sector also got a boost from plans to set up a £400m fund to stimulate more “full fibre” network investment by smaller players in the telecoms market.
How the chancellor is aiming to stimulate “economically productive infrastructure”

How does the Autumn Statement 2016 affect me?

Why Hammond’s debut is all about economics not politics

Housing and rental market

More new homes
A large part of the infrastructure investment fund will be spent on housing, including an extra £1.4bn on affordable homes. Ministers will also set aside £2.3bn by 2020-21 for infrastructure to help local authorities “unlock new private housebuilding in the areas where housing need is greatest”, with the aim of building 100,000 homes.

Right to buy
Ministers will also introduce a wider pilot programme of the Right to Buy scheme for housing associations — enabling tenants to buy their homes — for more than 3,000 households.
How the government is addressing Britain’s housing crisis

Letting agents fees
Mr Hammond took aim at the charges letting agents can levy on tenants for services such as administration and referencing. The government believes the ban will help millions of households in private rented housing by sparing them what can amount to hundreds of pounds in fees.
Why the chancellor is shifting charges away from tenants


Why Philip Hammond’s plan for an Autumn Budget makes sense

Robert Shrimsley: Captain Hammond soothes frayed nerves in economy

Sebastian Payne: Philip Hammond is the chancellor Brexit Britain needs

The chancellor’s move will not help landlords who are ‘just about managing’


Corporation tax
Corporation tax cuts to remain as previously planned by George Osborne. The rate will fall to 17 per cent by 2020.

Personal allowance
The chancellor confirmed the lowest tax threshold would rise to £12,500 by the end of this parliament from the £11,500 coming into force next April. Similarly, the higher rate threshold will rise from £45,000 to £50,000 over the same period.

Salary sacrifice
Employees face big rises in the cost of some benefits as the tax break on some salary sacrifice schemes is removed from April. The move is set to raise about £235m a year. Some big items, such as pensions contributions, will be exempt.
Find out which schemes the chancellor is cracking down on

Insurance premium tax increase
The basic levy of 10 per cent on insurance premiums will increase by a fifth to 12 per cent from next June.
Read how insurers have reacted to the rise

Fuel duty remains frozen
For the seventh year running, fuel duty remains on hold.


How markets reacted to the Autumn Statement

Three tax and finance experts give their verdicts on the Autumn Statement

No repeat of last year’s ‘Little Red Book’ stunt from John McDonnell

Personal finance

The Money Purchase Annual Allowance, introduced in 2015, is to be cut from £10,000 to £4,000 to prevent “inappropriate” double tax relief. The MPAA rules are complex but in general apply to over 55s who have “flexibly” accessed a money purchase scheme for income.
For more on the new pension rules click here

Savings bond launched
The chancellor announced a National Savings and Investments Bond, which will pay 2.2 per cent. Contributions will be capped at £3,000 and money cannot be withdrawn for three years.
How the government is stepping in to fill the gap left by high street banks

Increase in national living wage
The “national living wage” will rise from £7.20 to £7.50 an hour next year, a 4 per cent increase, but official projections suggest it is now on course to reach only £8.80 by 2020.
Why the plan to raise the minimum wage to £9 an hour has been derailed

Changes to universal credit
Universal credit taper rate to fall from 65 to 63 per cent, which Mr Hammond says will help 3m households.

… and finally

Treasury issues Nissan denial
The Treasury was forced to deny that taxpayer funds had been pledged to persuade Nissan to invest in the UK, after the government’s independent watchdog accused it of avoiding questions over taxpayer exposure to the deal.

The OBR said the Treasury “declined to address the substance” of its question whether “any contingent liabilities had been created in respect of assurances provided to Nissan” that led the Japanese carmaker to decide to build two future car models at its Sunderland plant.

Several hours after the publication of the OBR document, the Treasury vehemently denied there were any “contingent liabilities”, an analysis it said had been provided by the Department for Business, Energy and Industrial Strategy.