The Autumn Statement delivered by chancellor Philip Hammond on 23rd November offers the first major insight into the government’s financial plans both in the lead up to Brexit and in the period immediately following the UK’s departure from the EU. But whilst the country’s economic future was clearly a major factor within Mr Hammond’s first statement as Chancellor, there are also numerous implications for the day-to-day finances of people across the country.
A key announcement within the Autumn Statement was a change to salary sacrifice schemes, which enable employees to receive goods or services in place of part of their salary, which in turn lowers both their national insurance and income tax payments. Whilst the most popular options – childcare vouchers, pension contributions and bicycles as part of the ‘cycle to work’ scheme – will stay as they are, others, such as gym memberships and computer equipment, will be taxed from April next year. Company cars with ultra-low emissions, however, will continue to be exempt from tax.
Motorists received both good and bad news within the statement. Fuel duty remains frozen for the seventh year in a row, which Mr Hammond claims will save car drivers an average of £130 per year, with van drivers set to save around £350. However, as Insurance Premium Tax is set to rise from 10% to 12% in June 2017 – the third rise of this tax in 18 months – this is likely to cancel out the benefits for many. Other insurance products such as home insurance and pet insurance will also see an increase.
There are some benefits for earners as the income tax threshold is set to increase slightly from the current figure of £11,000 to £11,500 in April 2017. The National Living Wage will also increase from £7.20 to £7.50 an hour at the same point.
Former chancellor George Osborne’s plan to balance the books by 2020 is clearly now a distant memory as the national debt is set to rise from last year’s figure of 84.2% to 87.3% this year and again to 90.2% in the 2017-18 financial year. The forecast for the period until 2021 has also worsened, with the government predicted to be £122 billion worse off than in the previous forecast given in the Budget in March. Mr Hammond has already been accused of offering a particularly pessimistic outlook – particularly by ‘Brexiteers’ – with the Chancellor’s response being that the view laid out is only one of several potential possibilities for the UK’s economic future.
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