Autumn Statement 2016 – the rural impact
At first glance Philip Hammond’s first Autumn Statement seemed remarkably short on announcements. The most important news was probably that this would be the last Autumn Statement in this form, and in future we will see a Spring Statement and an Autumn Budget. This change will at least reduce the current trend of giving good news to take effect years into the future and then repeating it at six monthly intervals, whilst letting the bad news slip out in the small print and then stealthily take effect without further publicity.
There were some new initiatives on benefits, living wage, infrastructure spending and housing, most of which had already been released into the public domain before the big day. Tax news was largely confined to confirming changes announced in previous budgets. Despite potential financial pressures in the future, the reduction in Corporation tax to 17% was confirmed, as was the aspiration to increase personal allowances to £12,500 and the higher rate threshold to £50,000 by 2021.
Once again though, some of the devilry in the detail is worth looking at. The increase in Insurance Premium Tax is significant, with the charge going up to 12% from June 2017. This tax has doubled within two years, and has now risen from a modest 2.5% when it was introduced. For a household or business which might be insuring cars, buildings and contents this will now be a significant cost, and this is particularly likely to affect rural areas where the level of car ownership is necessarily higher.
There are also actual or potential upward charges to the benefit in kind regime: some tax advantageous salary sacrifice schemes will now be stopped and there is an ominous mention of reviewing the way benefits in kind are valued for tax purposes., particularly in respect of employer provided accommodation – a change which might have a particularly serious impact on the agricultural sector where the tied cottage can still represent a significant element of a farmworker’s remuneration and an essential component in employing staff to rural areas. A consultation on this area is promised next year.
There are some welcome announcements for the rural economy. An investment of £1 billion has been promised to improve broadband communications (although there is a fear that this may just speed up connections for those who already have broadband at a speed which rural businesses can only dream of). The doubling of the Rural Business rate relief will be of great benefit to village shops, post offices, garages and pubs, removing many of these vital businesses from the rating charge altogether.
Finally, what of the “elephant in the room”? The massive changes to tax administration which will follow on from the “Making Tax Digital” regime are likely to have a far greater practical impact on rural businesses than any of the other changes announced in this Autumn Statement, but here there was a resounding silence, broken only by the promise that a response to the consultations held in the Autumn will be released in January – barely 14 months before the provisions of the new system come into effect.
If you would like further information on the topics discussed in the article please contact Sarah Dodds, speak to your local MHA MacIntyre Hudson advisor or send enquiry.