Autumn Statement: What does it mean for the Consumer sector?
24th November 2016
Philip Hammond made a number of announcements in his Autumn Statement yesterday that will bring welcome news to consumers, including the increase in personal tax allowance and the minimum wage, as well as raising the tax threshold for higher tax from £43,000 to £45,000.
Although consumers are expected to see an increase in their disposable income, retailers’ margins will be under further pressure; the increase to the minimum wage, business rates and expected price hikes due to inflation are likely to have a significant negative impact.
However, the Chancellor’s announcement that the government will support the private sector by rolling out full-fibre broadband by 2020-21 and 5G mobile communications will provide a better platform to support online sales.
There was also confirmation that the government will introduce a new soft drinks industry levy to be paid by producers and importers of soft drinks that contain added sugar. The levy will be charged on volumes according to total sugar content. This measure will affect all business in the soft drinks industry from manufacturers through to distributors and retailers, with an exclusion for small operators.
Below we have highlighted other announcements from the Chancellor that will impact the sector:
Announced in the Budget 2016 and following consultation, legislation will be introduced in the Finance Bill 2017 to strengthen the regime for the disclosure of avoidance of indirect tax. Read more.
Corporation Tax Rates
The government confirmed its commitment to the previously announced reductions in the corporation tax rate, meaning that the rates of corporation tax will fall to 19% from 1 April 2017 and then lowered to 17% from 1 April 2020.
Making Tax Digital
In addition the government will publish its response to its consultation on Making Tax Digital. This is likely to be particularly burdensome in the sphere of VAT.
Renewed commitment to the “Business Tax Road Map”
The government confirmed its continued commitment to the Business Tax Road Map published at the time of Budget 2016. Read more.
The consultation on VAT grouping, which has arisen because of European Court case law which suggests that the UK VAT grouping rules may be out of line with EU law, will continue. It is possible that any changes to legislation will be postponed until after Brexit.
Retail Export Scheme
The Chancellor has announced funding with a view to digitising the Retail Export Scheme, to reduce the administrative burden of travellers to the UK.
For a full summary please visit our dedicated hub for more commentary on the Autumn Statement.