Ian Edwards, tax partner at EY Northern Ireland, comments on the Chancellor’s Autumn Statement:
"The Chancellor may have avoided pulling rabbits from hats, but this Autumn Statement was certainly intended to make instability disappear. This was very much in keeping with a traditional role of an economic statement, setting out the future direction rather than revealing mass changes that take immediate effect. Indeed, the tax rises, outside of energy, increase significantly towards the end of the forecast period, as thresholds are frozen for the next two years."
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“While the £50bn ‘black hole’ in annual public finances remains a significant sum, the measures announced today will begin to plug it, but won’t deliver this full amount per year until 2027/28. However, once put into the context of the UK’s total tax receipts exceeding £1 trillion by 2025/6, it is clear why the Chancellor didn’t feel the need to act too swiftly. The extensions to threshold freezes announced today are intended to avoid exacerbating the effects of a recession in the short term but will start to contribute to greater tax receipts for the Exchequer, particularly once inflation causes pay to rise."
Regarding business, Ian stated there was not much discussed except for energy and that the UK would stay committed to the changes to international tax being discussed at the global level. Ian went on to say: "One area of action was in the changes to tax support for Research and Development, where the Chancellor differed from his predecessors and shifted support from small to big business. Those hoping for broader investment support will have to wait until the Chancellor next takes to the dispatch box. The government will be hoping that the stability of the economy is enough to maintain the attractiveness of the UK, despite the rise in corporation tax."
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Finally, Ian reacted to the national insurance freeze. He said: "The other key personal tax announcement, that is forecast to raise one of the largest amounts for the Treasury and could have an indirect impact upon individual's wages, is the decision to hold the secondary threshold for employer national insurance contributions at the current level of £9,100 for the next five years. As a result, the cost of employing people will rise as salaries increase but the threshold remains frozen for employer's national insurance contributions – this is expected to bring in an extra £25bn to the Exchequer over the next five years to 2027/8.”
Source: Written from press release
