The Autumn Statement. JP Mindell CTA th November 2017

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1 The Autumn Statement JP Mindell CTA 24 th November

2 The Autumn Budget 2017 Eeyore or Tigger?

3 Contents Economic Forecasts Setting the scene Tax Measures Conclusions 24/11/2017 3

4 Introduction About Me Background in personal tax and shares Big 4 accountancy Senior manager In house adviser to Henderson Global Investors Spearheaded SIPP s and share schemes Pioneered Financial Education winning awards Head Judge IFS/Proshare Awards

5 Autumn Budget Expenditure plans and taxes Taxes downgraded Legacy of 3 rd Finance Bill this year?

6 Phil s gaffes 1. There are no unemployed people 2. Public sector workers are overpaid 3. Most people have a second home 4. The EU are the enemy 5. Even women can drive trains 6. Manchester is in the north-east 7. No votes in defence 8. Driverless car U-turn 9. Hammond's HS2 blunder Not 32 billion but 52 billion 10. Laura Kuenssberg to the rescue on NI

7 Reasons to be cheerful or gloomy? Cheerful Unemployment at 45 year low Gloomy Wage growth below inflation Growth higher in 2017 But not as high as in Europe Good FDI Productivity low Govt borrowing below forecast OBR forecasts sluggish tax revenues

8 The Pressures to spend

9 Chancellor locked in Triple lock on pensions Ring-fence on School, Health, overseas aid 2% of GDP on defence NIC rises Petrol Personal Allowance Higher Rate band

10 The long march to budget stability

11 OBR marking

12 Why do economists make forecasts? To make weathermen look good!

13 The Declining Deficit OBR wrong by nearly 50%!!! 80 Chart 2016/7 Deficit /17 OBR forecast revised forecast Outturn 45.7

14 Sluggish GDP 2 OBR GDP / / / / /22

15 What is causing the GDP downgrades

16 Restate figures

17 Productivity failure

18 The productivity conundrum High employment Zombie companies Low interest rates Failure to invest Cheap Labour

19 Relationship Deficit Productivity

20 OBR forecasts 70 The Never ending Debt? / / / /21 March November

21 The Declining Deficit to September Deficit / / / /18

22 Receipts 2017/18 to date 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Increase in receipts Total VAT NIC Income Tax and CGT Total VAT NIC Income Tax and CGT CT CT

23 The Tax Gap in proportion 600 Tax Gap total tax receipts tax gap total tax receipts tax gap

24 Sources of tax gap 1.8 avoidance by multinationals avoidance by multinationals avoidance by multinationals avoidance by largest multinationals avoidance by largest multinationals

25 Sources of the tax gap 18 Sources of the tax gap Avoidance SME Evasion Avoidance SME Evasion

26 Declining Deficit 2017/18 Receipts up 3.8% Expenditure up 3%

27 Phil s Resilience Fund 29 Billion? 24/11/2017 Autumn Budget

28 Hammond s hope? OBR predicts low Economy out performs More space for Chancellor next year?

29 Hey big spender Infrastructure Transport Housing Electrics Education Health Universal Credit

30 Interesting facts Rising Europeans in UK since BREXIT Inflation peaks at 3% No surplus in sight Middle of G8 in growth Wages no growth for decade and a half Rich 1% pay 28 % of all Income tax

31 Tax rises already baked in the figures CT losses above 5M Interest deductions limited for BTL Interest restriction for CT Termination payments changes Salary Sacrifice curbs Dividend Nil Rate band cut to 2,000 in April 2018 Avoidance a further crackdown

32 NIC changes Taylor Report Class 2 going Dependent Contractors Further consultation

33 Crackdown on non payment of CT & CIS Insolvency use to escape tax debt The Budget saw confirmation of a new measure which expands the scope of the existing security deposits legislation to include Corporation Tax (CT) and Construction Industry Scheme (CIS) deductions. The security is given to HMRC to ensure that the taxpayer will meet their existing and future tax liabilities that are at risk of non-payment as a result of serious noncompliance, or deliberate insolvency.

34 Additional Compliance resource for HMRC There will also be additional compliance resource for HMRC to enable it to tackle those who 'use insolvency to avoid their liability', exploit new risking tools to identify users of new avoidance schemes and new users of existing schemes

35 Government Priorities Productivity & Quality jobs Total Jobs

36 Possible changes Curb on Zombie companies Push for automation in manufacturing Research & Development boost Infrastructure

37 Safety first No personal tax rises despite manifesto omissions A defensive budget A little bit in lots of places Corporate taxes take the strain

38 Changes binned Pensions VAT threshold down to 25K NIC rises IT Thresholds frozen

39 Tax changes Freezing indexation allowance for Companies EIS restriction on preserved capital plans Stamp Duty abolition for first time buyers up to 300K RDEC up to 12% Witholding on Royalties

40 Knowledge intensive boost double the limit on the amount an individual may invest under the EIS in a tax year to 2 million provided any amount over 1 million is invested in one or more knowledge-intensive companies; double the annual investment limit for knowledge intensive companies receiving investments under the EIS and from VCTs to 10 million. The lifetime limit will remain the same at 20 million; allow knowledge-intensive companies to use the date when their annual turnover first exceeds 200,000 in determining the start of the initial investing period under the permitted maximum age

41 Making Tax Digital no business will be mandated to use Making Tax Digital (MTD) until at least April 2019; only businesses with a turnover above the VAT threshold ( 85,000) will be mandated to use Making Tax Digital for Business (MTDfB) from April 2019, and then only to meet their VAT obligations; businesses with a turnover below the VAT threshold will not be required to use MTDfB from April 2019 but can choose to do so; and the scope of MTDfB will not be widened before the system has been shown to work well and not before April 2020 at the earliest.

42 Business Rates Bringing forward to 1 April 2018 the planned switch in indexation from RPI to the main measure of inflation (currently CPI). Legislating retrospectively to address the staircase tax (by reinstating the previous valuation practice in multi-occupancy buildings, prior to a recent Supreme Court judgment). Moving to revaluations every three years (in place of five), following the next revaluation, currently due in 2022.

43 Till the pips squeak!! 37.5% of GDP Highest since the 1980 s 24/11/2017 Autumn Budget

45 24/11/

AUTUMN BUDGET November The Budget. chartered accountants & tax advisers

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