Autumn Budget 2017: What does this mean for you?

Senior Tax Specialist, Lisa Baum

The Chancellor of the Exchequer, Philip Hammond, delivered his second budget of 2017 earlier this week, taking a balanced, long term approach. The focus of his speech took a positive view on securing Britain’s future outside the EU and embracing the change, challenges and opportunities that this will bring.

There were no major changes or surprises in the budget. The headline was the abolishment of Stamp Duty Land Tax (SDLT) for first time buyers on properties worth up to £300,000. There were also some environmentally focused changes to company cars and the potential to introduce a tax on single-use plastic items.

The core message of this budget was supporting families and business to build an economy fit for the future generation. This supports the government’s vision that every generation should look forward to a better standard of living than the previous. The key is developing the skills of our young people to enable them to secure employment in the new digital age. The dream of owning their own home can then again be a reality.

The government has already committed almost £700 million to Brexit preparations and today the Chancellor set aside a further £3 billion to fund this over the next two years.

The Chancellor spoke about a technological revolution. Britain is, and must remain, at the forefront through its universities, research institutes, commercial development labs, factory floors and business parks across the country. Hammond stressed the need for continued investment in technology to secure this new future for Britain.

Hammond committed to support Britain’s key public services, keep taxes low and to provide help for families and businesses who are under pressure. This message on embracing the future and building Britain’s global success is a refreshing change from the doom and gloom of previous years’ talks about recession, a shrinking economy and the impact of Brexit.

At MPA, we advise businesses operating in innovative sectors so we welcome this commitment to research and development and long term technological growth in Britain.

R&D Tax Credits

The announcement to invest a further £2.3 billion into research and development was a welcome boost, although the Chancellor lacked clarity on exactly where this would be seen.

The Office of National Statistics stated that a 3% of GDP investment into research and development would lead to growth in the entire economy, and clearly Hammond is striving towards this.

The Research and Development Expenditure Credit (RDEC) is to be increased to 12% from 1st January 2018. This is specifically aimed at large companies who have already received a reduction in the corporation tax rate this year, but what about the smaller businesses?

The continuing support of the SME sector with the existing regime is great news. However, it would have been nice to see an increase in the R&D relief for SMEs. The current rate of 130% has been eroded slightly by the reduction in the headline Corporation Tax rate, so SMEs have fallen behind. It is encouraging, however, that the government continues to demonstrate support for SME’s, particularly within the innovation sector.

With the help and guidance of MPA, hundreds of companies, both small and large, have been able to claim R&D tax relief and use these funds to invest in staff and equipment, commercialise on their ideas and expand their enterprises. The budget demonstrates the continuing commitment to all kinds of innovation and infrastructure.

Innovation

The Chancellor spoke highly of Britain having some of the best companies and small business in the world, which we absolutely agree with.

He said that he wanted a new technological business to be founded every half an hour and committed to investing over £500 million in a range of initiatives to support this. Here we saw a continuation on the theme from the Spring Budget 2017, supporting artificial intelligence and driverless vehicle systems.

The support for emerging technology can only be a positive indication of things to come, with a specific statement that the government is ready to step in to replace European Investment Fund lending if needed.

I was pleased to hear Hammond’s promise to double the annual allowance, to £2 million, for people investing in knowledge intensive companies through the Enterprise Investment Scheme (EIS). This can only serve to boost the number of start-ups, and shows a genuine commitment to innovation and a desire to reward innovators. These are the companies who will continue to invest in R&D in the future and contribute to this secure economy for generations to come.

Environmental measures

The ever-popular topic of electric vehicles played a large part in the budget, even with some light-hearted references to a well-known celebrity’s view on the matter. £400 million was committed to establish a new charging infrastructure, £100 million for Plug-In-Car Grants and £40 million for research and development in charging technologies.

The budget also withdrew a specific electric vehicle focused tax.  It is no longer considered at taxable perk to charge your vehicle at work. This will make the employees of The MPA Group happy as we have just installed a charging points in our car park!

There were also various measures announced to support the protection of our environment, with discussions on tax charges for single-use plastic items and tax-breaks for clean air initiatives. It’s difficult to see a negative when increasing taxation on polluting items.

Lisa Baum, Senior Tax Specialist at MPA

For more information on any of the points raised here, or to see how we can help you plan for the future of your business, contact us today. To read our in-depth report on this Autumn Budget, click here.