Autumn Statement - November 2016
Philip Hammond today delivered his first Autumn Statement to the country since his appointment. A difficult job in the best of times, the new Chancellor has had to face the aftermath of the Brexit vote as well as a slowing economy and a fall in the value of the pound.
The headline announcements from today's statement were simple. Businesses need stability to invest in the UK, especially after the Brexit decision. It is however forecast to slow down due to the uncertainties associated with the Brexit transitional period. Lower business investment is expected to exacerbate the long-standing weakness in UK productivity. With this in mind the Autumn Statement is aimed at maintaining the country's productivity during this transition.
Chancellor confirmed that the majority of the budgetary announcements in the spring will go ahead as planned. This includes the reduction of Corporation Tax to 17% by 2020 and rising individual personal allowances.
Research & Development :
As a proven method of growth, The Chancellor announced a £23bn National Productivity Investment Fund (NPIF). This fund will focus on growth through infrastructure and innovation investment. Innovation and research and development have been highlighted as a core element for The Government's plan for growth in the UK.
The Chancellor confirmed that there will be a further £2bn investment in research and development by 2020. This covers not only academic institutes but also businesses in the UK. For companies developing new technologies or to those innovating this means that a large area of funding has been opened up. As experts in this field, Leyton can help you maximise your return from this funding.
In addition to this further funding of research and development the Chancellor announced £400 million of investments through the British Business Bank. This funding will be open to small businesses pursuing innovation.
R&D tax relief:
To ensure the UK tax system is strongly pro-innovation, the government will review the tax environment for R&D to look at ways to build on the introduction of the ‘above the line' R&D tax credit to make the UK an even more competitive place to do R&D.
Since the introduction of the new Patent Box regime based on the modified OECD Nexus approach, the majority of the new legislation has been published in Finance Act 2016. Some remaining provisions such as the cost sharing arrangement will be introduced in Finance Bill 2017.
Museum sector relief:
Following the government's recent consultation to the introduction of the museum/gallery sector tax relief, it has now been confirmed that both touring and permanent exhibitions will attract tax relief. The respective relief rates are 25% and 20%.
A maximum of £500,000 qualifying expenditure cap has been introduced to cater for this arrangement. This will result in a maximum relief of £100k and £80k for the two categories of exhibition due to fact that only up to 80% of the total qualifying expenditure will attract relief.
The new relief is available from financial year 2017 and will last until 2022. A sunset provision has been included which means unless extended the relief will expire in April 2022. The government has promised advance review of the situation before the deadline, so to provide certainty to claimants.
For us at Leyton, we welcome the government's commitment to the UK's innovation drive, which no doubt will serve the business community well in the years of uncertainty ahead. We also look forward to details on how the R&D tax relief can be further enhanced. We are well placed to help our clients through our expertise in these areas.