The fact that Chancellor Philip Hammond’s first Autumn Statement is likely to be mainly remembered for the announcement that it is to also be his last, is perhaps the greatest proof of a change of direction from previous Chancellor George Osborne, who was known for producing many rabbits from the hat.
Despite a generally uneventful Statement, largely due to the level of pre-statement drip feeding of information, there were nonetheless some points of interest, as the Chancellor sets to steer the British economy through the uncertainty of the forthcoming withdrawal from the European Union.
Here are a few policy announcements you may or may not have spotted.
Apprenticeship wage boost
There will be an increase in the National Living Wage for apprentices from £3.40 to £3.50 an hour, to be implemented in April 2017. Around 16,000 AAT students are apprentices, so the increase in the minimum rate of pay for apprenticeships will be welcomed by many. Most accountancy apprenticeships pay above the National Living Wage anyway but in some other sectors this will be a much needed increase.
The country not only needs an increase in apprenticeship starts but in completions that lead to full employment. The hiring of apprentices can provide valuable business assets as and when they are provided with the right opportunities to become skilled, and ultimately can provide a boost to the economy. The ability to provide more in-depth training for apprentices and other employees would benefit not only individuals but their employer as well.
Simplification of National Insurance Contributions
The Office of Tax Simplification’s call to align employer and employee National Insurance contributions were heeded by the Chancellor, meaning that both employees and employers will, from April 2017, start to pay National Insurance (NI) on weekly earnings above £157.
AAT has repeatedly called for simplification of the tax system, including around National Insurance. It might therefore seem like good news that the Chancellor announced that National Insurance paid by employers and employees will be aligned from April 2017. However, this isn’t really a simplification measure; it’s simply a tax hike for business.
There’s plenty more simplification opportunities that the Chancellor failed to take, – including tackling the complexity around ISAs and issuing further clarification around the direction of the Making Tax Digital scheme. AAT is broadly supportive of any measure that simplifies the application of tax, and at least the move around NI shows that the Chancellor is prepared to act.
Small business boost
Businesses (as well as households) nationwide will benefit from the £1 billion plus invested in digital communications by 2020-21. Faster and more reliable broadband will give businesses the opportunity to remain at the forefront of technological communications, allowing them to offer excellent customer service and remain competitive in an increasingly-global economy.
In addition, an extra £400 million will be invested in venture capital funds to unlock up to £1 billion of new investment in innovative firms hoping to scale up, while businesses in rural areas in the UK received a boost with the news that rural rate relief will be doubled to 100%. This news could benefit SMEs in rural areas through a tax break worth up to £2,900 a year.
We’d like to see a better deal for SMEs, and in particular for them to get the help and guidance to maximise their growth potential. Having digital connectivity in place, in conjunction with other infrastructure investment announced by Hammond, is positive news.
Yet given the ongoing concerns about trade in a post-Brexit environment, the best announcement for many small businesses may have been the doubling of UK Export Finance capacity, with the Government looking to make it easier for British companies to export goods and services.
Brian Palmer is the tax policy adviser for AAT.