Political and tax commentators are broadly at a consensus with the view that there was nothing particularly unanticipated in Philip Hammonds speech on Wednesday, other than this would be a last Autumn Statement.
Dominic Stuttaford (Norton Rose Fulbright) represented what seems the majority view among tax experts when he said that there were no big surprises, but he explained that the Autumn Statement contained ‘some good, less good news and bad news’ from the government.
‘The good news is that the government confirmed its commitment to reduce corporation tax to 17%', Stuttaford said. 'The less good news for many will be the confirmation that the restrictions on relief for interest and the changes to the loss rules are going ahead. The bad news comes for the insurance industry and insureds, with yet another increase in the rate of insurance premium tax on the way; it will have doubled in the last two years. Others may be hit by the restrictions on salary sacrifice, which is expected to yield over £1bn in the next five years.’
The Autumn Statement was ‘fairly dull from a tax point of view’, said Jeremy Cape (Dentons), but ‘we have to remember this is what we had asked for’. It was as yet unclear whether Philip Hammond is going to be a chancellor looking to reform and simplify the tax system, Cape said. But he did praise the chancellor’s abolition of employee shareholder status shares, introduced in 2013. ‘No one really wanted it, there was no substantive consultation on its design, and it resulted in easy to achieve tax avoidance by those who it was apparently intended to benefit.’
Kevin Nicholson (PwC) believed that the Statement was largely good one for businesses: ‘The commitment to innovation and productivity plays to the UK’s strengths: we’re a big producer of intellectual property. Anything that can help harness and nurture knowledge, innovation and research is a good thing. Other positive signals include doubling export finance capacity, and the commitment to cutting the corporation tax rate as planned. While the government has said its industrial strategy isn’t about picking winners, the focus on R&D suggests the government does have its favourites.’
Tax avoidance was also a priority with the usual raft of measures to combat aggressive tax avoidance. Jason Collins (Pinsent Masons) observed that the Statement was noteable for a 'continued focus on measures to tackle and punish intermediaries between HMRC and taxpayers’.
But the overall message is that the chancellor has tried to provide some certainty and stability. Michelle Quest, head of tax, KPMG in the UK: ‘it’s also clear the chancellor is listening to business. With just one major fiscal event to contend with each year, companies will get fewer changes to handle, creating a more stable environment. What’s more, by moving the Budget to the autumn this will give all taxpayers more time to come to terms with announcements before they come into force in April. With no other major announcements revealed today, the Treasury seems to be taking a more measured approach; carefully considering responses to consultations and not rushing to decisions. This is certainly a welcome development. Looking further ahead, the chancellor has evidently considered the need to maintain a sustainable tax base in a world where ways of working are evolving rapidly. In this vein, it looks as if the government is exploring what sort of tax system can best support the modern economy in the medium term.’
Political and tax commentators are broadly at a consensus with the view that there was nothing particularly unanticipated in Philip Hammonds speech on Wednesday, other than this would be a last Autumn Statement.
Dominic Stuttaford (Norton Rose Fulbright) represented what seems the majority view among tax experts when he said that there were no big surprises, but he explained that the Autumn Statement contained ‘some good, less good news and bad news’ from the government.
‘The good news is that the government confirmed its commitment to reduce corporation tax to 17%', Stuttaford said. 'The less good news for many will be the confirmation that the restrictions on relief for interest and the changes to the loss rules are going ahead. The bad news comes for the insurance industry and insureds, with yet another increase in the rate of insurance premium tax on the way; it will have doubled in the last two years. Others may be hit by the restrictions on salary sacrifice, which is expected to yield over £1bn in the next five years.’
The Autumn Statement was ‘fairly dull from a tax point of view’, said Jeremy Cape (Dentons), but ‘we have to remember this is what we had asked for’. It was as yet unclear whether Philip Hammond is going to be a chancellor looking to reform and simplify the tax system, Cape said. But he did praise the chancellor’s abolition of employee shareholder status shares, introduced in 2013. ‘No one really wanted it, there was no substantive consultation on its design, and it resulted in easy to achieve tax avoidance by those who it was apparently intended to benefit.’
Kevin Nicholson (PwC) believed that the Statement was largely good one for businesses: ‘The commitment to innovation and productivity plays to the UK’s strengths: we’re a big producer of intellectual property. Anything that can help harness and nurture knowledge, innovation and research is a good thing. Other positive signals include doubling export finance capacity, and the commitment to cutting the corporation tax rate as planned. While the government has said its industrial strategy isn’t about picking winners, the focus on R&D suggests the government does have its favourites.’
Tax avoidance was also a priority with the usual raft of measures to combat aggressive tax avoidance. Jason Collins (Pinsent Masons) observed that the Statement was noteable for a 'continued focus on measures to tackle and punish intermediaries between HMRC and taxpayers’.
But the overall message is that the chancellor has tried to provide some certainty and stability. Michelle Quest, head of tax, KPMG in the UK: ‘it’s also clear the chancellor is listening to business. With just one major fiscal event to contend with each year, companies will get fewer changes to handle, creating a more stable environment. What’s more, by moving the Budget to the autumn this will give all taxpayers more time to come to terms with announcements before they come into force in April. With no other major announcements revealed today, the Treasury seems to be taking a more measured approach; carefully considering responses to consultations and not rushing to decisions. This is certainly a welcome development. Looking further ahead, the chancellor has evidently considered the need to maintain a sustainable tax base in a world where ways of working are evolving rapidly. In this vein, it looks as if the government is exploring what sort of tax system can best support the modern economy in the medium term.’
