Autumn Statement 2016: Expectations

Chancellor Philip Hammond will deliver his first Autumn Statement to parliament this afternoon.

With the vote to leave the EU casting uncertainty over the UK’s future economic relationship with Europe, anticipation over the direction the government will take is high. 

Commenting ahead of the statement, Carolyn Fairbairn, director general at Confederation of Business Industry, said that Hammond “should set a high bar for tax changes, focussing on targeted measures that address the current economic challenges: supporting investment and productivity growth.”

Ahead of the chancellor’s statement to the House of Commons, here are some potential measures that have got people speculating.

Infrastructure

The British Chambers of Commerce has called for the chancellor for direct investment in ‘quick start’ infrastructure projects such as housing, following the home building fund announced in October.

Adam Marshall, director general, said:

“The Autumn Statement gives the government a great chance to set the tone for its relationship with British business, by pulling out all the stops to support investment, infrastructure improvements, and business confidence.”

Tax-Free Benefits

Philip Hammond looks set to restrict tax-free benefits for employees offered through salary sacrifice schemes.

HRMC already announced details to reduce tax and national insurance contributions (NICs) savings from the scheme, proposing that benefits should be chargeable to income tax and class 1A employer NICs.

Stamp Duty

In a letter to the chancellor, Saga are calling for a break in stamp duty to help more young people get on to the housing ladder and help older homeowners downsize. 

Paul Green, director of communications at Saga, said:

“Our research shows a third of over 60s want to downsize but the cost of moving is a real barrier to people changing homes in retirement. Stamp duty imposes an effective tax on them doing so.”

Lifetime ISA

Sara Wilson, head of platform proposition at Alliance Trust Savings has commented on the possibility of the Lifetime ISA being scrapped in the Autumn Statement:

“There is a risk that large scale changes such as the end to lifetime allowance could have the effect of adding yet more complexity to the pensions system for both savers and providers, so any measures would need to be set out carefully.”

VAT

According to NFU Mutual, a cut in VAT by 5% could provide individuals more spending power and businesses up to £19.3 billion in extra money.

Paul Shattock, commercial sector specialist, said:

“With other announcements such as increased infrastructure spending seen as more likely, whether this opportunity can be delivered to customers and benefit UK businesses remains to be seen.”