What does the Autumn Statement 2016 mean for you?

As winter sets in, the new Chancellor released the Government’s Autumn Statement, with their budgets and forecasts for the upcoming months and years. With a mix of some good news and some not so good news, now is a great time to take note of the upcoming changes and plan ahead.

 

For individuals

Fuel duty frozen for 7th year

2017 will see fuel duty remain unchanged for another year, meaning no increase in the price of petrol or diesel. This will save car drivers an average of £130 per year, and van drivers an average of £350 a year – and be good for businesses as well.

 

Saving opportunity for young adults

A new three-year National Savings and Investments (NS&I) bond, with the option of saving between £100 and £3,000, will be offered to savers from spring 2017, with a market-leading rate of 2.2%. This new NS&I account will be available for anyone from 16 years old and above and is great news for many savers who have been struggling to get a decent return on money they have squirreled away for a rainy day – in fact, it is predicted to benefit at least 2 million people.

 

Personal Allowance and Tax thresholds

For this tax year (6th April 2016 to 5th April 2017), the Personal Allowance was set to £11,000 – meaning that you don’t pay income tax on the first £11,000 that you earn. The higher rate of tax is then applied to your income over £43,000.

For the next tax year (2017-2018), this will be increased to £11,500, while the higher rate of income tax will be applied to your income over £45,000, and so reducing the amount of income tax you pay.

Income Tax v4 Tax Cirlces 2017 18 

By the tax year 2020-2021, the Personal Allowance is due to be raised to £12,500, and the higher rate threshold to £50,000.

 

Increase in National Living Wage and National Minimum Wage

In April 2017, the National Living Wage (for people over 25 years old) will increase from £7.20 to £7.50 per hour, which means an extra £500 per year for full-time workers who were previously on the National Minimum Wage!

The National Minimum Wage (for those under 25 years old) will also increase:

Age Group

Current Minimum Wage

Minimum Wage from April 2017

21 – 24 year olds

£6.95

£7.05

18 – 20 year olds

£5.55

£5.60

16 – 17 year olds

£4.00

£4.05

Apprentices

£3.40

£3.50

 

Universal Credit and Free Childcare

When you receive Universal Credit whilst working, the benefit you receive decreased as your income increases. To make this a process gradual, and help you be better off in work than not, a 65% taper rate is used to calculate how much your benefit payments are reduced by.

This means that for each £1 you earn above your income threshold, your Universal Credit is reduced by 65p (and you still receive the other 35p/£1 extra that you earn).

At the start of the next tax year (in April 2017), the Universal Credit taper rate will be reduced to 63%, which means for every £1 you earn above your income threshold, your benefit payment is reduced by 63p (and you get to keep the other 37p). This change will help about 3 million households.

Examples from the Government predict that:

From September 2017, working families will be entitled to up to 30 hours free childcare per week for all 3 and 4 years olds.

In addition, tax-free childcare will start to be rolled out in 2017. This scheme will remain under review to make sure that it is delivering the vital support needed by many working families.

 

A ban on letting agent fees to tenants

For years letting agents have been able to charge renters some pretty hefty (and unregulated) fees at the beginning of tenancies for things such as administration costs, references, non-refundable hold deposits, and credit or immigration checks – meaning that, on average, tenants were being hit with an extra £220 to £500 each time they started a new tenancy!

The great news for tenants is that letting agents will no longer be allowed to charge these fees to tenants (which will benefit up to 4.3 million household across the country), but instead these fees will be transferred to landlords. This system is already the case for landlords in Scotland, but is bad news for landlords across the rest of the UK.

 

Pension Scam Crackdown!

Like most of us, you’ve probably received a fair few phone calls from unknown companies trying to ‘help’ you with your accident claim or to sell you something you don’t want. Often times these calls come about because somewhere we didn’t tick/un-tick a tiny box to not receive third party communications, other times it’s simply a case of ‘cold calling.

Sadly, one of the most vulnerable groups in our society is the almost 11 million pensioners who are targeted by as many as 250 million cold call scams each year. Thankfully, the Government is now seeking to protect them from being tricked out of their life savings as authorities look at ways to tackle the pension scam problem.

 

Insurance Premium Tax increased

Insurance Premium Tax is a tax on insurers, and from 1 June 2017 this will be increased from 10% to 12% - following the increase from 9.5% to 10% as of 1October 2016. It is likely that these costs will be passed on to the customer, meaning that insurance costs for your car and home are likely to increase – with a predicted rise of £51 per year to the average household insurance bill. 

When it comes to a business, that means business, vehicle, building and contents insurances will likely all increase too.

 

 

For Businesses

Corporation tax

The Government will be honouring the commitment made in the Spring Budget to lower Corporation Tax to 17% by 2020. This will benefit more than 1 million businesses across the UK.

 

Venture Capital Funds

Working with the British Business Bank, £400 million worth of funds will be used to support innovative small businesses to expand, unlocking up to £1 billion of new investment for new start-ups and helping to prevent them from being bought up by bigger companies.

 

Business rate relief for rural businesses

In April 2017, some small businesses in rural areas will receive a much needed tax break and see their Rural Rate relief increased from 50% to 100% - it is predicted that these businesses could save up to £2,900 per year.

 

Tax on work perks

Some bad news for millions of workers, who benefit from tax-free work perks - salary sacrifice schemes, when an employee swaps some of their salary for a non-cash benefit through their employer, will no longer be a tax advantage. Previously, both employee and employer have made a tax saving because the perk is taxed at a lower rate (or not at all) compared to your salary (employees don’t pay income tax on these perks and employers don’t pay national insurance on that value). These perks include things like a mobile phone, gym memberships, health insurance and free health checkups.

However, come the new tax year, you can still receive those perks but most salary sacrifice schemes will no longer be tax-free but instead be taxed at the same rate as your cash income – meaning employees at many firms would instead have to pay hundreds of pounds to keep those benefits.

There will be some leniency in that:

 

Service-based businesses

As of April 2017, business with limited costs (like some labour-only companies) will see their VAT flat rate increased from 14.5% to 16.5% - but this won’t be a simple general increase. Businesses will need to compare the cost of purchased goods to what they’ve made in sales and work out whether they’ve bought enough goods to not have to use the 16.5% rate.

 

National Insurance

The Autumn Statement stands by the previous Spring Budget announcement to abolish Class 2 National Insurance contributions from April 2018 – meaning a simpler system for self-employed persons who will then qualify for State Pension though Class 3 and Class 4 contributions. 

Back to all posts
Go to top

 

You might like

Why CitizenSafe?

We're the identity people. We offer a simple, secure and ethical identity verification service that helps you gain access to online government services.

Learn more about CitizenSafe 

Stay tuned

Keep up to date with the latest news about CitizenSafe and GOV.UK by registering for our newsletter.