Mr Hammond moves in and rearranges the furniture
23rd November 2016 by Andrew Scott
With the Government keen to judge the mood of the public following the Brexit vote, the new tenant at Number 11 was eager to show in his maiden speech on the state of the economy that he can empathise with JAMs - people who are ‘just about managing’ - by outlawing new tenancy agreement fees (I wonder if he claimed his on expenses); not good news for landlords.
The curious announcement to abolish the Autumn Statement and replace it with an Autumn Budget, and in turn replace the Spring Budget with a Spring Statement is nothing new. Ken Clarke moved the Budget to November in 1993, Gordon Brown moved it back to Spring in 1997 and George Osborne re-branded the Pre-Budget Report to the Autumn Statement in 2010. So I would say that Mr Hammond is yet to make an original move as Chancellor.
Asides from the superficial re-naming of the biannual economic statements, here are some of the key points for businesses in the region’s innovation and technology sector:
- £400m to be provided by the British Business Bank to venture capital funds to encourage £1bn of private investment in ‘innovative’ SMEs seeking to scale up. Larger SMEs will need to ensure their gross assets remain under £15m before and £16m after any investments to qualify for the Enterprise Investment Scheme; this limit is currently £200,000 for Seed EIS start-ups.
- Enhance the ‘above the line’ R&D expenditure credit (RDEC) regime for larger companies (and certain SMEs). No announcement was made what this would entail but if the current 11% rate was increased to 12%, this would equate to tax benefits of 9.6p for every £1 of qualifying R&D expenditure compared to the current 8.8p benefit.
- National Productivity Investment Fund to provide an extra £2bn in R&D funding per year by 2020/21, which will be managed mainly by Innovate UK. Whilst this additional investment is welcome news, any grants are likely to be notified State Aid and so SMEs will need to consider weighing up whether the grant is of more value than the SME R&D tax relief as it will not be possible to claim both.
- East of England selected as one of the 8 regions for the second phase of Science & Innovation Audits. The Government will be keen to use data analysed from innovative companies in the region to drive improvements in R&D tax relief policy to encourage more businesses to spend on R&D projects and boost productivity.
- The anticipated restriction on salary sacrifice schemes has been confirmed with pension contributions, child care vouchers and low emission cars being spared the axe.
- There will be no change in direction on Corporate Tax policy with the planned rate cut to 17% by 2020 being re-affirmed.
Some interesting announcements but we will need to see the practical detail of what this all exactly means in terms of changes to the tax legislation, rates and relief.
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