Not surprisingly, Brexit has dominated this year’s financial and political news. The uncertainty over a deal or the implications of no-deal being agreed has taken centre-stage, with politicians and financial experts alike, trying to predict exactly how Brexit will affect us. In a recent survey of 2,400 businesses conducted by the British Chambers of Commerce, 98% of them wanted a trade deal to be in place before we leave the EU in 2019. The government’s recent defeat will mean that parliament will get a vote on the final deal, however with most of the divorce from the EU yet to be negotiated, it remains to be seen what the final deal will look like, and how it will ultimately affect the UK.
In the Autumn Budget one announcement grabbed all the headlines – the removal of stamp-duty on homes under £300,000 for first-time buyers. This announcement initially seemed to go down very well, however with an average saving of just £1,660 on every first-time buyer’s property, and the Office of Budget Responsibility (OBR) forecasting that the stamp-duty cut will drive up house prices by around 0.3%. It is unlikely that the removal of stamp-duty will go anyway to fixing the housing crisis.
3. Research & Development
There was good news for larger businesses in the Autumn Budget, with the announcement of an increase in the Research & Development (R&D) Tax Credit to 12%. This increase will be effective from 1 January 2018, and coupled with the reduced Corporation Tax rate of 19% which came into effect on 1 April of this year, could see a big win for larger companies with a significant R&D spend
4. Making Tax Digital
Making Tax Digital, will be perhaps the single largest change in the tax system for a generation. It will revolutionise the way businesses pay their taxes. In July of this year, the Financial Secretary to the Treasury and the Paymaster General announced that Making Tax Digital (MTD) will come into effect from April 2019. The original announcement for MTD, made by ex-Chancellor George Osborne, had stated that it would become effective from 1 April 2018, however that was always optimistic, and this revised timetable makes a lot more sense. With the introduction of the Finance Bill in September 2017, we can now expect MTD to go ahead without any further problems. If you’d like to find out more about MTD and how it might affect your business, contact us to see how we can help.
For the eighth year in a row, fuel duty will remain frozen, this is good news for car owners, but won’t please environmental campaigners who believe the fuel-duty freeze undermines the recent introduction of the £220 million Clean Air Fund.
An extra £337 million was announced in the Autumn Budget, which will fund several new improvements across the country, including a fleet of new trains on the Tyne & Wear Metro. This is great news for the north-east where the current stock of trains has been long overdue an overhaul, and this is sure to give a boost to the whole region.
Technology has featured heavily in the financial news in 2017. From tax evasion to an extra £100m to help people buy electric cars, the technology sector has seen some wins and losses throughout this year. However, probably the single most significant moment for technology companies came in the Autumn Budget, when the Chancellor announced a new change to the way online businesses will be taxed. The new ‘tax on royalties’ means companies will have to pay tax on royalty payments that are made in relation to UK sales to low tax jurisdictions outside the UK and making online marketplaces liable for VAT paid on goods. The Chancellor hopes that these new regulations will bring in an extra £200m a year, and will send a warning to companies like Amazon and Google, that the UK government is starting to get serious about making these companies pay their way.
8. Tax avoidance
Following on from last year’s Panama Papers, 2017 saw the leak of the Paradise Papers, which implicated a host of people and lead to perhaps the only time HM The Queen, Mrs Brown’s Boys and Bono would be mentioned in the same article.
The Paradise Papers was the second biggest data leak after the Panama Papers, and showed the complex ways companies and individuals can avoid paying tax.
After the release of the Panama Papers many people suggested that tax evasion was not wide spread, but with the release of the Paradise Papers, that opinion is unlikely to last. Apart from wide-spread condemnation, and some awkward questions for many of the people implicated in the leak, there has yet to be anything concrete set out by the UK government to show that they are committed to preventing this type of sophisticated tax avoidance.
Although Bitcoins have been around for a while, 2017 has seen a remarkable rise in their value. In January of this year, Bitcoin topped $1000 for the first time in three years. This month Bitcoin made its debut on the world’s futures market, making it the first digital currency to ever be included. On its debut Bitcoin surged by up to 25%, pushing their value up in the process. Judged on 2017, Bitcoin won’t be going anywhere soon – and may just pave the way for future digital currencies
The announcement of the Autumn Budget also brought with it the announcement by the OBR that they were reducing productivity growth by an average of 0.7 percentage points, with an economy 3% smaller in 2020 than previously expected.
11. Business rates
The planned 4% rise in business rates had many businesses concerned about the potential implications. The British Chambers of Commerce, the Federation of Small Businesses and the British Property Federation, all joined forces to tell the Chancellor that the potential rise could see an exodus of businesses relocating abroad. In the Autumn Budget, the Chancellor did concede, he announced that business rates would now be set by the Consumer Price Increase (CPI) rather than the Retail Price Index (RPI).
This month saw the announcement that inflation has risen to 3.1% – the highest rate in nearly six years. The inflation rate rise was blamed on the rising cost of food, transport and clothing costs – the fall in the pound also contributed. With the cost of living already up and wages squeezed, it could mean a tough time ahead, particularly for retailers.