Philip Hammond presented what was to be his first and the last Autumn Statement on Wednesday 23rd November as he announced that going forward the budget will be in the Autumn with a Spring Statement replacing the current one.
In this article, we summarise the key points arising from the Autumn Statement and focus on what the changes may mean for the retail sector.
In Summary (general):
- the government reaffirming the objectives to raise the personal allowance to £12,500 and the higher rate threshold to £50,000 by the end of this Parliament.
- reduction of the Money Purchase Annual Allowance from £10,000 to £4,000.
- Insurance Premium Tax to rise from 10% to 12% from June 2017.
- tax and National Insurance advantages of salary sacrifice schemes to be removed.
- anti-avoidance measures for the VAT Flat Rate Scheme.
In addition the Chancellor announced the following pay and welfare measures:
- National Living Wage to rise from £7.20 an hour to £7.50 from April 2017.
- Universal Credit taper rate to be cut from 65% to 63% from April 2017.
In the March Budget the government announced various proposals, many of which have been subject to consultation with interested parties.
In summary (retail specific)
- National Living Wage set to increase by 30p to £7.50 per hour from April 2017.
- Corporation Tax to fall to 17% by 2020.
- Benefits offered by the Salary Sacrifice Scheme are to be restricted from April 2017.
- £6.7bn package to reduce business rates.
- £400m investment to help small business finance.
- Productivity Investment Fund worth up to £23bn.
Autumn Statement Retail Impact
National Minimum Wage to rise
Pete Wilmer, retail specialist and Partner at Hawsons, had this to say: “This year, the Chancellor announced a couple of things that will directly affect the retail sector. The first being the restrictions on tax-free benefits for the Salary Sacrifice Scheme, this will impact retailers who use this scheme to attract and retain employees. Therefore, companies will have to make a decision between keeping the schemes and offsetting the cost themselves, or remove the schemes completely and risk upsetting key employees.”
“The National Living Wage is also set to be increased by 30p to £7.50 per hour from April 2017. This wasn’t unexpected, but some retailers may struggle to implement the new Living Wage.”
“On a more positive note, a Productivity Investment Fund worth up to £23bn to focus on innovation and infrastructure is definitely good news for the sector, as is the £6.7bn package to reduce business rates and the £400m investment to help small business finance.”
“Overall, a mixed reaction to the Autumn Statement, with potential issues arising from the restrictions on the Salary Sacrifice Scheme and the increase to the National Living Wage. However, some good news with the Productivity Investment Fund, reduction in business rates and the investment to help small business finance.”
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Pete Wilmer heads up the firm's Corporate Finance service offering. Having worked in the corporate finance arena for many years with a national accountancy practice and with a major corporate bank, Pete has a wealth of experience and a track record of delivering first-class outcomes for clients. You can contact Pete at [email protected] or 0114 266 7141. [/author_info]