ICAEW CEO, Michael Izza's reaction to Philip Hammond's Autumn Budget 2017, alongside and initial analysis of the implications the announcements for the economy, taxes, public finances and businesses.
Technical managers from ICAEW Tax Faculty provide a comprehensive summary of the announcements relating to tax in the Autumn Budget 2017, covering: business tax; personal and employment taxes; pensions and savings; VAT and duties; and rates and allowances.
This is a summary of the announcements on tax and related matters. It has been prepared by the ICAEW Tax Faculty team, with an overview by Frank Haskew, and edited by Jane Moore.
The Budget documents include details of changes which have been announced previously. This summary focuses on new announcements.
All the government announcements and publications can be found on gov.uk on its Autumn Budget 2017 page. There is also a page with links to all the HMRC tax-related documents and announcements.
The main Budget documents are the Red Book, which summarises the Budget announcements and policy decisions, and the Overview of Tax Legislation and Rates (OOTLAR), which sets out details of each policy announcement.
The Finance (No. 2) Bill 2017-19 (referred to here as FB 2017-18) will be published on 1 December 2017. This Bill will become Finance Act 2018. Some of the measures mentioned in the Budget will be included in Finance (No. 3) Bill 2017-19 (referred to here as FB 2018-19) which will be published in autumn 2018 and legislated as Finance Act 2019.
In a series of online video broadcasts and webinars ICAEW will be examining the tax implications of announcements and the broader UK economic picture.
Tune in at 12.30pm on Friday 24 November for a live video broadcast from the ICAEW's Tax Faculty. Experts from the faculty will provide analysis and discussion of the key announcements effecting tax practice and policy from the Autumn Budget.
This Tax Faculty webinar will provide a practical overview of recent tax changes for practitioners.
At 11:00 on the Tuesday following the Budget, ICAEW's Simon Thompson and Senior Economist at Oxford Economics, Martin Beck will host this free webinar. They will be discussing some of the key announcements of the Budget and the potential implications they have for the UK economy in the midst of Brexit negotiations.
ICAEW's live coverage of the Chancellor Philip Hammond's Autumn Budget 2017. On 22 November, live commentary will be provided by the economia team and experts from across the industry, examining key announcements on tax, the economy, public finance and the implications for businesses.
The letter outlines key areas ICAEW believes the chancellor should be addressing, including the need to: ensure a budget surplus by 2025; tackle regulation and tax complexity to ensure the UK remains competitive post Brexit; and encourage investment in innovation to drive economic growth.
24 October 2017
Rt Hon Philip Hammond MP
Chancellor of the Exchequer
1 Horse Guards Road
Ahead of this Budget The Institute of Chartered Accountants in England & Wales is calling on you to:
This Budget must convince the country there is a long-term vision for the economy. Government debt still equates to £130,000 per household – an enormous public liability. As it stands, the Government is leaving a trail of unsustainable debt and if we do not get our spending and borrowing under control this will have the greatest impact on the next generation.
Average net national debt is expected to grow to £2tn in the next five years and the level of public indebtedness is the highest since the aftermath of the Second World War. As you explore measures to tackle intergenerational fairness we believe the solutions must operate within the budget rules that you set out in your first Budget – or we risk extending this to a five Parliament problem.
We would warmly welcome a focus on long-term strategies, including anticipating a likely increase in the costs of government borrowing. The last time the Debt Management Office published a strategy was 1995. Much has changed in the world since then, so a new approach is overdue and it must take into account the vulnerability of swapping long-term finances debt with short-term variable debt.
The complexity of our current tax code undermines confidence, acts as a regulatory burden on business, suppresses entrepreneurial spirit and inhibits economic growth. Changes at this Budget should be kept to a minimum while attention is given to ensuring a successful roll-out of Making Tax Digital and making the necessary changes to accommodate Brexit.
Beyond Brexit, the UK has the opportunity to initiate a radical and comprehensive review of the tax system to make sure it works in the digital age. Our tax system has become too complicated, thereby increasing compliance costs and making it difficult to operate and administer.
The accelerating spread of e-business models is undermining the traditional tax base and the rise of the ‘gig’ economy is making this look anachronistic. We need an informed debate about what is a fair balance between the taxes (including NIC and Apprenticeship Levy) paid by and for employees and those paid by the self-employed.
Businesses are cash rich and we recommend that you take the opportunity to inject optimism into our slowing economy through the new industrial strategy. Despite the lack of certainty on Brexit, the economic conditions for capital investment remain positive and this should help drive growth. But currently, businesses are conspicuously reluctant to make major capital investments; they must again see good reason to invest in technology, training and development, as well as new products and services.
The UK excels at providing funding for already profitable companies or proven technology, yet when it comes to innovative SMEs that need cash up-front – whether that is pioneering medicines or ground-breaking engineering – there is a serious gap. The Government consultation on financing growth in innovative firms is a step in the right direction but this must now translate into radical action.
Businesses are bracing themselves for trading after Brexit, which might include the reintroduction of tariffs although this is clearly subject to the result of further negotiations. Our future competitive advantage will lie in our ability to produce – and fund – world-beating products. Tax relief alone will not be sufficient to support firms. Britain has a strong scientific base, so grant money will be necessary to take new ideas from universities and into production. We need to encourage investment in high-risk businesses, because that is where innovation lies.
I would welcome the opportunity to discuss this in more detail.
Michael D M Izza