The National Living Wage will rise to £7.50 from April 2017
The personal tax allowance will be £11,500 from April 2017
As widely predicted, tax savings on salary sacrifice and benefits in kind will be stopped, with exceptions for ultra-low emission cars, pensions, childcare and cycle to work schemes. Employers operating these schemes will become liable for NICs while employees will be taxed on the value of the benefit. There could be a significant impact where employees have the option of a car allowance but opt to take a company vehicle that doesn’t fit the ultra low emission category (electric or hybrid).
Employee and employer National Insurance thresholds to be equalised at £157 per week from April 2017
Insurance premium tax will rise from 10% to 12% from June 2017. Make sure you factor this into 2017 budgets.
A penalty for tax avoidance schemes that are challenged and defeated by HMRC will put the onus on individuals and tax advisers to ensure any schemes have been positively vetted before using them.
The outlook for the economy looks challenging. The Office for Budget Responsibility (OBR) growth forecast was upgraded to 2.1% in 2016 – from 2.0%. Thereafter growth looks set to slow: 1.4% in 2017 and 1.7% in 2018.
The effects on individual businesses are hard to predict. Sales growth may be harder to achieve so perhaps it’s time to revisit sales and marketing budgets.
Meanwhile, inflation is also expected to rise, putting pressure on input prices for many businesses. Budgeting, cost control and pricing strategies should be reviewed.
There is potentially some good news for technology and construction businesses. £23bn will be spent on innovation and infrastructure over five years and £2bn per year by 2020 on research and development funding.
Also a £2.3bn housing infrastructure fund is promised to help provide 100,000 new homes in high-demand areas and £1.4bn to deliver 40,000 extra affordable homes.
£1.1bn extra will be invested in English local transport networks and more than £1bn on digital infrastructure.
100% business rates relief on new fibre infrastructure
£1.8bn from Local Growth Fund to English regions
Rural Rate Relief to be increased to 100%
Doubling UK export funding capacity
As the outlook continues to look uncertain it’s more important than ever to keep a close watch on your financial data. If you need help setting up management reporting and effective financial modelling please get in touch.