The Autumn Statement 2016 predictions

The Autumn Statement 2016 predictions

Autumn Statement predictions 

The Autumn Statement 2016 on Wednesday is set to be an important event.  It will be the Chancellor’s first opportunity to outline his plans for taxes & spending in the wake of the Brexit vote.

But what tax changes can we expect in the upcoming Autumn Statement?  Craig Walker, tax specialist at Hawsons, gives us his predictions:

The direction

The Chancellor has said that his first Autumn Statement will “set out a plan for guiding our economy through this period, and preparing it for the future after we leave the EU”.  He will reportedly announce broad direction and funding, but leave more policy announcements to his colleagues.

The Chancellor added “We need to raise the overall productivity of the economy to the level of the best by investing in the infrastructure, the R&D, the skills and the innovation that will enable us not just to survive, but to prosper on the world stage”.  He said that the UK economy has to be “match fit” after the Brexit negotiations.

Mr Hammond has stressed that any fiscal boost in the Autumn Statement will be careful, considered and targeted, and designed to help the UK to cope with the turbulence of leaving the EU.

Balancing the books

Mr Hammond has described the UK’s debt as “eye-wateringly” large and has promised that he will not leave the burden of debt to future generations.   However, he is set to adopt a more flexible approach to the deficit amid economic uncertainty following the Brexit vote.

The Chancellor has indicated that the Government will no longer target a budget surplus by 2020.  He is expected to push the deadline for eliminating the deficit well into the next Parliament.

Targeted help

The Treasury has said that the Autumn Statement will provide “targeted help to ordinary working families”.

Teresa May has been pushing for Mr Hammond to send a strong signal that the conservative government will take action to help families that are “just about managing”.  This key voter group, referred to in Whitehall as “JAMs”, relates to the six million households with net incomes between £12,000 and £34,000 a year.

The Autumn Statement is expected to free up some money to provide a boost to these people on modest incomes.  The Chancellor has said that he aims to share the prosperity across the country and across the income distribution.  It has been rumoured that policies to reduce the burden of childcare costs could also be announced in the Autumn Statement.

Welfare Benefits

The Chancellor is under pressure to soften £3.4 billion cuts to Universal Credit and delay £30-a-week cuts to disability benefit Employment and Support Allowance (ESA), due to take effect from April 2017.  However, the Chancellor has given little indication that he will reverse the proposals.

Personal Tax

There is likely to be some change in the area of personal tax, particularly as the government has indicated that it is committed to re-balancing wealth.

Currently, the personal allowance is £11,000 in 2016/17 and is set to increase to £11,500 in 2017/18.  The government has previously committed to raise the personal allowance to £12,500 by the end of this parliament and the Chancellor is expected to stick to this pledge.

The Chancellor is also expected to raise the higher rate tax threshold to £45,000 for 2017/18 (currently £43,000), with the aim of reaching a higher rate threshold of £50,000 by 2020.  This will be welcome news for middle earners who have been dragged into the higher rate tax threshold.

Corporate Tax

We should expect some news on corporation tax, as part of a government strategy to ensure that the UK remains a good place to do business following Brexit.  However, the new Chancellor has indicated that he will not cut the rate of corporation tax to as low as 15%, dismissing Mr Osborne’s plan as just a suggestion.  He has instead indicated that he intends to stick to the Government’s plan to cut the rate to 17% by 2020.

Capital Gains Tax

We are not expecting any major changes to the rates of capital gains tax.

There could be some fiddling around the edges with Entrepreneurs’ Relief with a possible tightening up of the qualifying conditions.

VAT

At the height of the financial crisis, VAT was slashed temporarily in order to boost growth and the Chancellor could seek to make a similar rate cut.  It is predicted that the Chancellor will hint at cutting VAT from 20% to 17.5%, however with customer confidence seemingly solid the Chancellor seems more likely to keep this up his sleeve until next year’s Budget.

Inheritance Tax (IHT)

The Autumn Statement may provide an update on the Government’s proposals to introduce inheritance tax on all UK residential property, regardless of the residence of the owner or ownership structure.

In addition, inheritance tax reliefs cost more than £20 billion so may attract attention from the Chancellor.  We could see the Chancellor introduce a cap of the value of IHT reliefs such as Business Property Relief.

National Insurance (NI)

The Chancellor may offer some clarification on NI rates for self-employed people when Class 2 contributions are scrapped from April 2018.

Mr Hammond could also announce consultation on moving towards combining income tax and National Insurance, but there is expected to be no change for at least five years.

Making Tax Digital

We expect an update on HMRC’s Making Tax Digital project in the Autumn Statement.  This relates to the project to move to a fully digital tax system by 2020.  You can read our article on the proposals here.

Pensions

There are calls for the Chancellor to scrap the state pension triple lock which ensures the amount of state pension pensioners receive rises each year by the highest of price inflation, earnings growth or 2.5%.  Critics claim it is no longer needed or affordable.  It seems highly unlikely that Mr Hammond will make any changes in the short term, but he may well launch a review into the matter and a consultation on what could replace the triple lock.

Major changes in pension tax relief are unlikely but there could be some fiddling round the edges with changes to the Annual Allowance and Lifetime Allowance.

Landlords

From April 2017 landlord tax relief for mortgage costs will be phased out.  It seems unlikely that the Chancellor will reserve the restrictions before they come into force, although a similar tax policy has just been scrapped in Ireland.

Stamp Duty Land Tax (SDLT)

There are calls for Chancellor to scrap the stamp duty surcharge on second properties, in light of the slowdown in the housing market and lower than predicted tax yield.  However, the Chancellor has given no indication that he will seek to reverse this.

Savings income

There are likely to be tax incentives to encourage saving, however so far the Chancellor has given very few hints.

It has been rumoured that the Chancellor could scrap the new Lifetime ISA which is due to be launched in April 2017.  Critics have argued that the new LISA risks undermining the Government’s auto enrolment initiative which is seeing millions of workers being automatically enrolled into workplace pensions.  In addition, several major providers have said they won’t be ready to launch in April.

It has been suggested that the Chancellor could scrap all six of the current ISA brands and move forward with just one ISA product, with a Help-to-Buy Government bonus on the first £4,000 of savings.

Research & Development (R&D)

The R&D tax incentives are likely to be increased. Mrs May has said “We will also review the support we give innovative firms through the tax system…because my aim is not simply for the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation”.

Salary sacrifice

The government are proposing to restrict the tax and national insurance advantages of providing benefits in kind through salary sacrifice arrangements.  Salary sacrifice typically involves an employer buying a personal item for an employee in exchange for foregoing part of their salary.  It is anticipated that the Chancellor will give some clarification on these proposals which are due to have effect from April 2017.

Hammond is likely to announce that pensions, childcare, bikes and other equipment for cycling to work will continue to be eligible for salary sacrifice.  However, any other items such as mobile phone contracts, computers and gym memberships will no longer be allowed to qualify.  There is likely to be some transitional protection for arrangements already in place.

Fuel tax freeze

The Chancellor is expected to scrap a planned 2p rise in fuel duty.

Air travel tax

MPs have been calling on the Chancellor to cut or scrap Air Passenger Duty and the Chancellor is expected to oblige.

Tax Avoidance

The Autumn Statement could see the announcement of new tougher measures to tackle tax avoidance.

This article comes with the usual disclaimer regarding all rumours and predictions: they should not be considered fact until they have been uttered by Mr Hammond himself.

Our tax specialists will be watching the Autumn Statement on Wednesday (23rd November) and providing live commentary as it unfolds.  To pick up on our commentary, follow us on Twitter (@Hawsons) or LinkedIn.

 

 

Craig Walker is a senior tax manager at the firm. He advises on all matters tax related, both corporate and personal, including income, capital gains and inheritance. For more details and advice, please contact Craig on [email protected] or 0114 266 7141.

How to recognise fake HMRC emails and other phishing scams

How to recognise fake HMRC emails and other phishing scams

How to recognise fake HMRC emails and other phishing scams 

Phishing is the fraudulent act of emailing a person in order to obtain their personal/financial information such as passwords and credit card or bank account details. These emails often include a link to a bogus website designed to encourage the unwary to enter their personal details.

How do you recognise if it is fake?

If HMRC needs to contact you about anything confidential they’ll reply by phone or post. HMRC never send notifications of a tax rebate or ask you to disclose personal or payment information by email or text message. It is important that you do not visit the website contained in the email as well as not disclosing any personal or private details. A selection of scam email addresses used to distribute the tax rebate emails can be seen below:

Tax rebate:

These contacts do not in any way represent HMRC.

Text messages

HMRC will occasionally send out text messages, but these messages will never ask for personal information (including bank details) nor will it offer a tax refund in exchange for personal information or bank details. If this does happen to you, it is important you never open the link within the text message and instead report it to HMRC investigators.

VAT Return email scam

If you receive an email that appears to be from HMRC requesting you to review you VAT Return, do not open the email or click on any of the links. These links could be malicious or could request you to disclose personal and private information. Instead, please report it to HMRC.

Other scams

Unfortunately, there are many other scams out there with new ones always being created, if you are unsure whether the contact you have received from HMRC is genuine, check here for other known scams and always remember that HMRC will never openly ask you for any personal information or banking details over text or emails.

 

 

Craig Walker is a senior tax manager at the firm. He advises on all matters tax related, both corporate and personal, including income, capital gains and inheritance. For more details and advice, please contact Craig on [email protected] or 0114 266 7141.

Hawsons fundraise for Children In Need with charity bake-off!

Hawsons fundraise for Children In Need with charity bake-off!

Hawsons fundraise for Children In Need with charity bake-off

Across all of our three offices, Hawsons have been fundraising for Children In Need with a dress-down day as well as a charity bake-off.  A big thank you to all those who entered the baking competition which was judged by Hawsons’ Healthcare Partner, Scott Sanderson (aka Paul Hollywood) and congratulations to Claire Pass (Payroll, Sheffield) for the winning entry for her stunning chocolate cake.

Children In Need is a project that aims to help children within the UK, by raising money in order to help give them a better  and happier life. We will be finding out how much was raised later today for this wonderful cause.  If you wish to donate please click on the following link: Children In Need: Donate

Claire Pass, Payroll and master baker.

 

The Autumn Statement – busy time ahead for the tax system

The Autumn Statement – busy time ahead for the tax system

The Autumn Statement and a busy time ahead for the tax system

The Autumn Statement on 23rd November is set to be an important event. We have a new Prime Minister and Chancellor of the Exchequer with a potentially different slant on economic policy than their predecessors. There is also the need to deal with the impact of Brexit.

On top of that, HMRC are proposing a number of short and long term changes to our tax system. Over the summer, HMRC issued over 30 consultation documents. Many of these are technical in nature but there are some radical and fundamental changes being aired.

Chief among these are the proposals related to the Making Tax Digital project and six of the consultation documents relate to this ambitious project. HMRC’s plan to move to a fully digital tax system by 2020 and a further update on this project is expected in the Autumn Statement. You can read our article on the proposals here.

Three of the consultation documents contain proposals to tackle the hidden economy. In 2013/14 the hidden economy ‘tax gap’ was estimated at £6.2 billion and HMRC are tasked with reducing the size of that gap.

On the Autumn Statement, Craig Walker, tax specialist at Hawsons, commented: “The Autumn Statement will be the Chancellor’s first opportunity to outline his plans for taxes and spending in the wake of the Brexit vote. So far the Chancellor has revealed very few hints. It will be interesting to see what changes to the tax system are announced, and the pace and scale of those changes.”

We will, of course, ensure you are kept up to date with tax changes that may impact upon you and your business.

Our tax specialists will be watching the Autumn Statement on 23 November and providing live commentary as it unfolds. To pick up on our commentary, follow us on Twitter (@Hawsons) or LinkedIn.

 

 

Craig Walker is a senior tax manager at the firm. He advises on all matters tax related, both corporate and personal, including income, capital gains and inheritance. For more details and advice, please contact Craig on [email protected] or 0114 266 7141.

Technological advancements in the manufacturing sector

Technological advancements in the manufacturing sector

Manufacturers invest in technological advancements

The manufacturing sector is going through a technological revolution, with more and more businesses taking the plunge into investing in new technology. In this article, we look at the technologies that could have the greatest impact on factory environments.

It is logical to assume that, with today’s modern cutting-edge capabilities, that factories could be heading for a more data-driven factory of the future where consumers, operators and designers will all share information on everything from initial concepts right through to installation.

Operators could access all and any materials on demand, and work with robots to use them safely while relying on virtual instructions via headsets or glasses. This will then in turn enable assembly lines to produce high quality work, highly personalised products that have zero defects. Below we highlight some of the technologies that are already driving much of the change in factory environments:

1. 3D printing

Rapid advancements in 3D printing have led to UK manufacturers exploring the use of the technology in production, but what really are the possible benefits of 3D printing? Here we look at customisation, cost, flexibility and speed to market.

3D printing is certainly not new with the technology first appearing more than 25 years ago. Advancements in 3D printing continues to gain pace as manufacturers look for greater flexibility and cost-savings in production, and the technology is now being embraced in a range of manufacturing industries.

3D printing could be the key element in determining whether or not many manufacturing businesses will flourish or fail in the future. Research indicates that 3D printing is revolutionising manufacturing as we know it, which will see companies being able to fulfil consumers’ desires, creating personal specifications on orders without significant time or cost constraints.

As the cost of the technology continues to fall, 3D printing now has the potential to fundamentally change the economies of scale for the smaller, pioneering companies, opening up considerable opportunities for innovation and growth.

3D printing is set to revolutionise how we manufacture

It is therefore important that all UK manufacturers, whether they are a small independent firm or a large firm with an international focus, start to consider the benefits of 3D printing and the impact it may have, and is likely to have, on manufacturing over the next few years.

1. Customised, personalised manufacturing

With standard, mass-production it is often too complex and too expensive to customise and personalise production. 3D printing will make this process much quicker and more cost-effective, benefiting both the manufacturer and the customer. Customised manufacturing may be particularly beneficial in the healthcare (e.g. dental) and fashion (e.g. jewellery) industries, meeting demand for bespoke products.

2. Cost-effective production

3D printing undoubtedly offers manufacturers the potential to considerably streamline their manufacturing processes and, in turn, also brings huge financial opportunities. Through reduced machine set-up time and reduced tooling costs, 3D printing can significantly reduce the cost per unit, particularly for small production runs which do not gain cost advantages through scalability. This is becoming increasingly important; a recent report found that 51% of SME manufacturers are seeing customers request orders in smaller quantities. Manufacturers must strive to make small production runs more profitable.

A product that is likely to have a short production run, or where there is uncertain demand, is sometimes overlooked by manufacturers due to the high up-front tooling costs of production. 3D printing would dramatically change this.

3. Greater flexibility in production

3D printing will also give manufacturers greater flexibility in what materials they use during the production process.

4. Reduced speed to market

3D printing may also give manufacturers the opportunity to compress design cycles (e.g. through identifying design errors earlier) and reduce the time it takes to take a new product to market. 3D printing allows development ideas to progress faster than ever before. Rapid prototyping can see designers have a prototype in their hand in just hours, not days, weeks or months.

Whilst there are clear benefits of 3D printing, the technology also brings challenges such as the potential cost of initial set-up and the possible problems that mass customisation may bring (too many options could overwhelm customers).

It will be interesting to see how many manufacturers adopt 3D printing approaches in the coming years and how that influences customer demand and buying patterns.

2. Internet of Things (IoT)

The concept of having a factory that is ‘connected’ has been gathering pace over the last few years. It essentially means expanding the ever-growing Web to link machines, computers, sensors and humans to improve efficiency by enabling new levels of information processing, monitoring, collection and analysis.

By incorporating this into factory life, it allows more precision and can translate all the data the devices collects and turn it into insights that can help determine multiple things such as; how much voltage is needed to produce a product or how temperature, humidity and pressure can impact performance.

Before businesses can invest in IoT, it is essential that the said business figures out what is most important to them and which information will be vital to future success. In addition to this, these next-gen devices will also require next-gen workers who have the ability to work with and understand complex machines but with a shortage of skilled workers, this may be difficult.

3. Robotics

Robotics have played an important role in the line of manufacturing and, over the last decade, China has emerged as the automated manufacturing powerhouse. In China since 2013, the number of multipurpose industrial robots in China has doubled to an estimated 75,000 in 2015, and that number is set to double again to 150,000 by 2018, according to the International Federation of Robotics.

However, some manufactures believe that only humans can innovate and produce ideas and the introduction of robotics is harmful to the innovation process. Having said that, robots are being employed to support existing workers and not replace them, this is known as ‘Cobotics’. It essentially means operators and robots working together to speed up the assembly process with a higher degree of quality.

4. Augmented reality

With the advancements in computer science and computer vision, information technology and engineering has enabled manufacturers to use real-time guidance and information to the point of use. Workers would simply use a pair of goggles which would have text, information and instructions displayed on the lenses for the worker to read as they perform complex tasks on the factory floor.

These goggles (or anything similar for that matter) enable the workers to carry out much more complex tasks and the augmented reality will allow for great precision and accuracy, as well as notifying the worker of the risks being imposed.

Of course, businesses would need to conduct a thorough analysis of their own factory, as well as their finances, to determine whether any of these technologies would benefit their business, or would just be an expensive mistake. Therefore, all businesses should contact a professional in the manufacturing sector before purchasing any new technology.

More from our manufacturing experts

You can find all of our latest manufacturing sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Chris Hill Senior Partner

Chris Hill acts as commercial partner for both corporate and non-corporate clients and has worked for Hawsons throughout his career. For more information or advice on anything covered in this article, please contact Chris on [email protected] or 0114 266 7141.