Autumn Statement Summary 2016

This year's Autumn Statement was notable for the fact that it was the last Autumn Statement we are ever likely to hear, as Chancellor Phillip Hammond confirmed that he will scrap the existing split Autumn Statement/Spring Budget announcements in favour of a single, annual Autumn Budget from 2017 onwards.

Nonetheless, despite its ‘end of an era’ feel, the statement contains some important proposals. The key headline announcements include:

  • Departmental spending plans as set out in the Spending Review will remain in place;

  • A commitment to deliver £3.5bn of savings across departments as part of the Efficiency Review agreed at the Budget;

  • Introduction of a business rates reduction package worth £6.7bn (much of this has been trailed previously);

  • Increases in the National Living Wage and National Minimum Wage from April 2017;

  • A commitment to reduce Corporation Tax to 17% by 2020 and;

  • Changes designed to phase out the favourable tax treatment of salary sacrifice schemes.

From a sport and recreation sector perspective, a few announcements are of particular significance.

As consulted upon back in the spring, Government has confirmed its commitment to “expand the circumstances in which companies can get Corporation Tax deductions for contributions to grassroots sports from 1 April 2017.” While there is no further detail at this stage, the Government will publish an Overview of Legislation in Draft alongside draft Finance Bill clauses on 5 December which should enable a better understanding of the scope and impact of the proposed changes.

Alongside this, the statement also confirms that Government will come forward with draft legislation to implement the soft drinks industry levy, also on 5 December. This is of particular interest to the sector given that the proceeds will go towards doubling the PE and Sport Premium for primary schools and supporting 25% secondary schools to extend the school day to offer a wider range of extra-curricular activities including sport.

Government has also announced that it will consult on changes designed to remove the tax and employer National Insurance advantages of salary sacrifice schemes from April 2017. There will be exceptions for salary sacrifice arrangements relating to pensions, childcare, Cycle to Work and ultra-low emission cars. The effect of this will mean that employees swapping salary for benefits will pay the same tax as those who buy them out of their post-tax income. Arrangements in place prior to April 2017 will be protected for a year.

While the exclusion of the Cycle to Work scheme is welcome, more detail is needed on how other similar benefits – for example gym or sports club membership – will be treated. Overall, it would be of concern if the proposed change ultimately ends up disincentivising the take-up of such benefits, particularly given the wider push to get more people physically active.

As regards major events, the Autumn Statement confirms the Government’s previously announced financial commitments to support bids for both the Cycling World Road Championships in 2019 and the Rugby League World Cup in 2021. In the case of the road worlds, Government has committed £9m to the hosting with a further £15 for legacy infrastructure. The Rugby League World Cup bid will receive £15m for hosting alongside £10m for legacy infrastructure.

On business rates, Government has reaffirmed its commitment to a package of reforms announced around Budget 2016 including a permanent doubling of Small Business Rate Relief meaning those with a property with a rateable value below £12,000 will receive 100% relief with tapered relief up to £15,000. In addition to these previously announced reforms, Government today committed to similarly extending rural rate relief to 100% from April 2017.

Alongside the Autumn Statement announcement, Government also confirmed that it will provide transitional relief for small businesses as a result of the 2017 revaluation of business rates. In practice this will mean any small businesses that experience an increase in bills as a result of the revaluation will have the increase capped at 5% for the first year with a reducing taper after that. This may assist some facility-owning sports clubs in transition but the precise impact will of course depend on the detail.

More like this

The axeman cometh (Part 2): Is the Autumn Statement going to prevent a long harsh winter for sports funding?

Spending Review 2015 and Autumn Statement: Local government and tax announcements