Autumn Budget 2017

Thursday, November 23, 2017

Chancellor Philip Hammond said he’d take a “balanced approach” to his second Budget of 2017. Once again the speech was light on headline-grabbing finance changes and there were no ‘giveaways’ or major surprises.

Instead, the chancellor focussed on measures to prepare the economy for post-Brexit life.
Raising productivity is key to boosting economic growth and wages, but growth has “remained stubbornly flat” and continues to be an issue.

In light of this, the Office for Budget Responsibility revised down its forecasts for growth.
It expects GDP to grow by 1.5% in 2017 (down from 2% predicted at the Spring Budget in March) and 1.4% in 2018 (down from 1.6%).

To help address the problem, the National Productivity Investment Fund, which supports innovation and infrastructure, will be extended by a year and expanded to more than £31bn.
The chancellor also announced a range of investments, including:
  • £3bn over 2 years to prepare for Brexit
  • £30m to develop digital skills distance learning courses
  • funding to support building 300,000 new homes a year by the mid-2020s.
Significant announcements for businesses include the VAT thresholds remaining unchanged for 2 years, while business rates will increase using the CPI measure of inflation from April 2018.

For individuals, stamp duty has been abolished for most first-time buyers while increases to the personal allowance and the national living and minimum wage will be welcomed by many.
This report summarises the announcements made by Hammond during Autumn Budget 2017 on 22 November 2017.

However, these are subject to change following the Finance Bill and the Spring Statement.

At a glance


Business rates Increases to be determined by CPI, not RPI, from April 2018
Staircase tax Businesses can have their original bill reinstated and backdated
R&D expenditure credits R&D expenditure credit rises to 12% from 1 January 2018

Infrastructure finance

Devolution deals Second devolution deal for the West Midlands
Regional transport 6 metro mayors to share half of £1.7bn transport fund


Personal allowance Basic rate threshold rises to £11,850, higher rate up to £46,350
National living wage Increase of 4.4% brings NLW to £7.83 an hour for over-25s
Pension lifetime allowance To rise to £1.03m for 2018/19 tax year 


Threshold frozen Threshold to remain at £85,000 for 2 years from April 2018
Anti-fraud measure All online marketplaces are jointly and severally liable for unpaid VAT of their sellers
Regional refunds Police and fire services in Scotland eligible for VAT refunds


Stamp duty Abolished for first-time buyers on all homes worth up to £300,000
Diesel cars Tax for diesel cars that fail to meet latest standards rise a band
Cigarettes and alcohol Tobacco rises by 2% above RPI; ‘white ciders’ face new duty


EIS Investment limit to double to £2m for knowledge-led companies 
Capital gains indexation allowance Indexation no longer calculated up to month of disposal
Company van benefit To be increased from £3,230 to £3,350 from 6 April 2018

Capital allowances

The annual investment allowance will remain at £200,000 for 2018/19 and 2019/20. The main rate and special rate writing down allowance on plant and machinery will be 18% and 8%, respectively.
The 100% first-year allowance for businesses purchasing zero-emission goods vehicles or gas refuelling equipment will be extended for a further 3 years.
For zero-emissions good vehicles, the scheme will end on 31 March 2021 for corporation tax and 5 April 2021 for income tax.
For gas refuelling equipment, the scheme will end on 31 March 2021 for both corporation tax and income tax.
The list of technologies and products covered by the energy saving first-year allowances has been updated. It adds 3 new products, which include evaporative air coolers, saturated steam to electricity conversions and white LED lighting modules to the list. The measure also modifies 9 and removes 2 items from the list.
The scheme allows 100% of the cost of an investment in qualifying plant and machinery to be written off against the taxable income of the period in which the investment was made.

R&D expenditure tax credit

From 1 January 2018, the rate of tax relief available to companies that carry out qualifying R&D and claim the research and development expenditure credit (RDEC) will increase from 11% to 12%.
The RDEC is a standalone and above the line credit that is brought into account as a receipt in calculating profits, which allows companies to claim an enhanced corporation tax deduction or payable credit on their R&D costs.

Company van benefit and fuel benefit charge

From 6 April 2018, the van benefit charge will increase from £3,230 to £3,350 and the van fuel benefit charge will increase from £610 to £633.

Company car fuel benefit and company car diesel supplement

Employees provided with fuel for private mileage in a company car will see the value of the multiplier used for calculating the cash equivalent of the fuel benefit increase from £22,600 to £23,400. This measure will apply on and after 6 April 2018.

The diesel supplement used to calculate the company car benefit and company car fuel benefit will increase from 3% to 4% for all diesels cars registered on or after 1 January 1998 that don’t meet real driving emissions step two standards (RDE2). Diesel cars which are certified to RDE2 standard will not be liable to the diesel supplement.

The maximum appropriate percentage applied for cars, including any diesel supplement, will remain at 37%.

Annual tax on enveloped dwellings

The annual chargeable amounts for the annual tax on enveloped dwellings (ATED) will increase in line with inflation for the 2018/19 chargeable period, which begins on 1 April 2018.
The increase will see the annual chargeable amount for a property with a value in the range of £500,001 to £1m rise from £3,500 a year to £3,600 a year.

Corporation tax rate

The main rate of corporation will remain at 19% from 1 April 2018. 

Removal of capital gains indexation allowance

For a capital gain made on or after 1 January 2018, the indexation allowance is applied in order to determine the amount of the chargeable gain will be calculated up to December 2017.

This change means for disposals made after this date, the indexation will no longer be calculated up to the month in which the disposal of the asset occurs.

Amendments to corporate interest restriction rules

The corporate interest restriction rules for large companies which incur net interest expense and other financing costs above £2m a year will be amended.
A number of technical changes will be made, with some having effect from 1 April 2017 when the corporate interest relief restriction rules commenced. The remainder will have effect from 1 January 2018.
Some of these measures include amendments to:
  • the calculation of group-EBITDA to align the treatment of R&D expenditure credits with the approach taken in the calculation of the tax-EBITDA
  • the infrastructure rules to ensure insignificant amounts of non-taxable income do not affect their operation
  • the definition of a group to align it with accounting standards and to ensure asset managers do not cause unrelated businesses to be grouped together.

Double taxation relief and permanent establishment losses

Legislation will be introduced to restrict the amount of credit allowed or deduction given for foreign tax where the company has received relief for losses against non-permanent establishment profits in the foreign jurisdiction.
The purpose of the policy is to ensure that relief for foreign tax is only given where profits have been taxed both in the UK and the foreign jurisdiction.
The measure will have effect for accounting periods ended on or after 22 November 2017 with a transitional rule applying for accounting periods that straddle 22 November 2017.

Other measures

A variety of other complex corporation tax changes were introduced which legislate to ensure:
  • technical changes are made to the hybrid and other mismatches regime
  • license arrangements between a company and a related party in respect to intangible fixed assets are subject to the market value rule
  • all activities by UK petroleum license holders that give rise to tariff income in relation to UK oil and gas assets are subject to ring fenced corporation tax and supplementary charge
  • the time limit of 6 years within which companies must adjust for any depreciatory transactions is removed when claiming a capital loss on disposal of shares in a group company
  • an anomaly is corrected whereby a postponed tax charge may become payable when a new holding company is inserted directly above an overseas company to which a UK company has previously transferred trade and assets of a foreign branch in return for shares.

Partnership taxation: proposals to clarify tax treatment

To provide more clarity over aspects of the taxation of partnerships, a number of measures have been proposed, affecting:
  • partners in nominee or bare trust arrangements
  • partnerships with partnerships as partners
  • investment partnerships
  • partnerships that are partners in another partnership.

Off-payroll working reform

The government will consult in 2018 on tackling non-compliance with the intermediaries’ legislation (commonly known as IR35) in the private sector.
The purpose of the legislation is to ensure individuals who effectively work as employees, but structure their work through a company, are taxed as employees.
The consultation will explore the possibility of extending the recent public sector reforms to the private sector.

Disincorporation relief

The government will not extend disincorporation relief beyond the current 31 March 2018 expiry date.

Electric cars

Employer-provided electricity at workplace charging points for electric and hybrid cars owned by employees will be exempt from being taxed as a benefit in kind from April 2018.


From 6 April 2018, the government will allow employees on maternity and parental leave to take a pause of up to 12 months from saving into their save-as-you-earn employee share scheme, which is an increase from the current limit of 6 months.

Subsistence benchmarking

With effect from April 2019, employers will no longer be required to check receipts when making payments to employees for subsistence using benchmark scale rates.
Employers will still be required to ensure employees are undertaking qualifying business travel.

Business rates

Major reforms were announced to business rates worth approximately £9bn by the end of parliament. There are a number of measures, which include:
  • bringing forward the planned switch in indexation from RPI to CPI to 1 April 2018
  • continuing the £1,000 business rate discount for public houses with a rateable value of up to £100,000, subject to state aid limits for businesses with multiple properties, for 1 year from 1 April 2018
  • legislating retrospectively to address the so-called ‘staircase tax’ to enable affected businesses to ask the Valuation Office Agency to recalculate valuations so bills are based on previous practice backdated to April 2010
  • moving to revaluations every 3 years following the next revaluation, which is currently due in 2022.

Withholding tax: royalties

From April 2019, withholding tax obligations will be extended to royalty payments, and payments of certain other rights, made to low or no tax jurisdictions in connection with sales to UK customers. This measure will apply regardless of where the payer is located.

Investment through venture capital trusts

A series of measures are announced intended to ensure that tax-advantaged venture capital trusts (VCTs) continue to focus on long-term investment in higher-risk companies.
These measures change certain rules on investments made by VCTs that will:
  • insert a final date of 6 April 2018 in relation to the applicability of certain ‘grandfathering’ provisions
  • double the time VCTs have to reinvest gains from investments from 6 to 12 months
  • require 30% of funds raised in an accounting period to be invested in qualifying holdings within 12 months after the end of the accounting period
  • require qualifying loans to be unsecured and ensure returns on loan capital above 10% represent no more than a commercial return on the principal
  • increase the proportion of VCT funds that must be held in qualifying holdings from 70% to 80%.
Venture capital schemes relevant investments
The definition of a ‘relevant investment’ is amended to ensure that all investments, including all risk finance investments made before 2012, are counted towards the lifetime funding limit for companies receiving investment under tax advantaged venture capital schemes.
The limit is £12m for most companies and £20m for knowledge-intensive companies.
This measure will affect companies, social enterprises, fund managers and individuals using the enterprise investment scheme (EIS), VCTs and social investment tax relief. The changes will apply to qualifying investments made on or after 1 December 2017.

Business taxation

Financial year from 1 April 2018 2017
Corporation tax rate 19% 19%
Loans to participators 32.5% 32.5%
Diverted profits tax 25% 25%

Infrastructure finance
The Budget contained a range of public expenditure announcements that could result in funds being accessed, or contracts bid for. These infrastructure announcements include (in no particular order):


The National Productivity Investment Fund will be extended for a further year with total funding increased to £31bn.
There will be an additional £23bn for investment in R&D.

Regulators’ Pioneer Fund

Plan to unlock £20bn for new investment in UK scale-up businesses, through:
  • a new fund in the British Business Bank, seeded with £2.5bn of public money
  • facilitating pension fund access to long-term investments
  • doubling EIS investment limits for knowledge intensive companies from £1m to £2m.

Electric Vehicle Technology

The chancellor announced:
  • £400m charging infrastructure fund
  • £100m in plug-in car grant
  • £40m in vehicle charging R&D.   


£220m Clean Air Fund to support implementation of local air quality plans.      


A range of spending commitments to support education including £20m to support further education colleges to prepare for T-levels.
Boosting digital skills via £30m in the development of digital skills distance training courses.


  • £28m in 3 new ‘Housing First’ pilots in West Midlands, Manchester and Liverpool
  • £630m small sites fund to facilitate delivery of 40,000 homes
  • £2.7bn to more than double the Housing Infrastructure Fund
  • £400m for estate regeneration
  • £1.1bn to unlock strategic sites
  • £8bn of new financial guarantees to support private house building and purpose-built private rented sector
  • £34m to develop construction skills.


  • £30m on digital connectivity on trains on Trans-Pennine route, £337m investment in replacement rolling stock for Tyne & Wear.
  Click here to download the budget information sheet