The Chancellor has delivered this year's Autumn Statement. Although this was light on new headline tax announcements there are some changes worth noting, along with confirmations of policies previously announced.

Also worth noting is the OBR's prediction of UK net public sector debt rising by c.£220bn over the next 5 years, as the government abandons the previous target of moving into budget surplus in the near future.

For more information on any of the following, please get in touch with any member of the tax team.

Employees and OMBs

  • The tax benefits of employee shareholder status (ESS) are withdrawn for new entrants - no tax reliefs will apply in respect of any shares issued on or after 1 December 2016, and legal advice on ESS has to have been taken by 1.30 pm today for the previous tax benefits to apply. This will not affect any ESS shares already issued. The timing implications are critical for ongoing transactions where ESS is relevant and may still be available: contact a member of the tax team to discuss this.
  • With effect from April 2017 salary sacrifice arrangements will no longer provide any income tax / national insurance benefits for employees and employers, with the exception of pension savings, childcare vouchers, cycle to work and ultra-low emission car schemes. Transitional rules will apply to arrangements already in place (and such arrangements will be protected until April 2018 or, in the case of cars, accommodation and school fees, April 2021).
  • As an extension to the measures announced in Budget 2016, the Government is now seeking to tackle disguised remuneration avoidance schemes by the self-employed. In addition, employers using disguised remuneration schemes will be denied corporation tax relief for their contributions unless PAYE and NICs are paid within a certain timeframe.
  • Various changes are being made to national insurance rules, many of which were proposed / discussed in Budget 2016. The announced changes include employer NICs applying to termination payments over £30,000 from April 2018.
  • Employment tax generally continues to be an area of interest for the Government. Consultations were announced on the valuation of benefits in kind and business expenses, and there was confirmation that public sector bodies engaging individuals through an intermediary will become responsible for applying PAYE and NICs.

Financial services

  • Insurance premium tax will increase from 10% to 12% from 1 June 2017. Assuming the cost is passed on by insurers, among other things this will result in an increase in the cost of W&I policies.
  • The scope of the bank levy has been narrowed, and the government has now confirmed there will be further exemptions from the bank levy for liabilities funding overseas branches – good news for larger UK banks with an international footprint.
  • It seems the new restriction on interest deductions (see below) will apply to banks and insurers in the same way as other corporates, despite previous suggestions it might not.
  • There is, however, a hint that the government is considering reducing the UK tax burden on banks in light of Brexit and the need for the UK to remain attractive to international FS businesses.

Corporates and MNEs

  • The Chancellor confirmed that he would continue with the Business Tax Roadmap laid out by his predecessor. In particular, he reconfirmed the Government's commitment to lower the corporation tax rate to 17% by 2020.
  • In a welcome move, the Chancellor has announced a streamlining and simplification of the substantial shareholding exemption. This will increase the availability of this valuable exemption and extend it to institutional investors, not just trading groups.
  • Companies face significant restrictions on the deductibility of interest expenses, with the Chancellor confirming that a proposed cap of such deductions at 30% of the UK EBITDA of a group will go ahead unaffected by Brexit, effective on 1 April 2017. The 30% cap can be lifted in certain circumstances where the worldwide corporate group has genuine external debt exceeding that amount.
  • The Government has proposed moving non-resident companies into the corporation tax regime, rather than the income tax regime that now applies to them. This could be favourable for non-residents in one sense, as CT rates are now planned to be lower than IT rates, and would represent a simplification of the tax system. On the other hand it is possible this could mean non-residents also become taxable on UK capital gains, and they would be in the scope of the interest restrictions referred to above.
  • Corporates will also face restrictions on the amount of prior year losses that can be used to shelter taxable profit, with the intention that companies always pay at least some corporation tax in years where they make profit. While many larger companies with less volatile earning profiles may be unaffected, this measure is likely negatively to affect project companies, start-ups, and other companies with business cycles longer than a year.
  • However, there will also be greater flexibility on the use of prior year losses, although banks will still face tight restrictions on carrying forward losses which arose prior to the financial crisis. These changes to use of losses have been announced previously, but are now confirmed to have effect from April 2017.

Real estate

  • Following significant changes in previous years to the regimes for both commercial and residential properties, there are no large SDLT changes.
  • Although not stated explicitly, it looks like the interest deduction restrictions coming in 2017 may not affect offshore landlords immediately, at least until those shift to paying corporation tax. That move to the corporation tax regime could also affect the administration and cashflow of non-resident entities.
  • Previously-announced reforms to business rates have been confirmed.


  • Fuel duty has been held at 57.95p per litre, the rate that has applied since the March 2011 Budget. That freeze on the duty is the longest for 40 years.
  • A 100% first-year allowance for expenditure incurred on electric charge-point equipment has been introduced with immediate effect.
  • There are various simplifications associated with the effective abolition of petroleum revenue tax. PRT was reduced to 0% from 1 January 2016.