Autumn statement - How it affects the legal sector
Chancellor of the exchequer Philip Hammond delivered his 'first and last' Autumn Statement yesterday, which will be replaced by a Spring Statement from 2018. This will be in response to the Office for Budget Responsibility (OBR) reports.
As expected, announcements focused on tackling the productivity gap and addressing the housing shortage whilst tackling inequality. In particular, the chancellor focused on policies which support the economy during the transition period following the decision to leave the European Union.
The main points were:
- Whiplash reform - The chancellor reiterated the Ministry of Justice (MoJ) announcement to reduce 'the unacceptably high number of whiplash claims' and allow insurers to cut premiums. He also announced that the government will bring forward supporting legislation in the Justice Bill and expects insurers to pass on savings. The government will also raise insurance premium tax from 10 per cent to 12 per cent from June 2017. The move represents a doubling in the tax rate on home and motor insurance premiums within the past two years.
- Legal support - From April 2017 all employees called to give evidence in court will no longer need to pay tax on legal support from their employer. The government stated that this will help support all employees and ensure fairness in the tax system, as currently only those requiring legal support because of allegations against them can use the tax relief.
- Prison safety and wider reforms to the justice system - The government will provide up to £500 million of additional funding to the MoJ to enable the recruitment of 2,500 extra prison officers to improve prison safety. It will also fund wider reforms to the justice system.
- Tax - As already announced, the government will introduce a new penalty for any person who has enabled another person or business to use a tax avoidance arrangement that is later defeated by HM Revenue & Customs (HMRC). As a new measure, the chancellor announced the government will consult on a new legal requirement for tax intermediaries to notify HMRC of the structures and the related client lists. It will also legislate to extend HMRC's data-gathering powers to money service businesses exploiting the hidden economy.
- Land Registry - The government has confirmed that it will be scrapping the privatisation of the Land Registry: 'Following consultation, the government has decided that HM Land Registry should focus on becoming a more digital data-driven registration business, and to do this will remain in the public sector. Modernisation will maximise the value of HM Land Registry to the economy, and should be completed without a need for significant Exchequer investment.'
Other measures announced include:
- A new £23 billion Productivity Investment Fund over the next five years
- A new £2.3bn Housing Infrastructure Fund
- £1.1bn of funding for English local transport infrastructure and more than £1bn in digital infrastructure
- A clampdown on salary sacrifice arrangements from April 2017 - childcare vouchers and cycle to work scheme will be protected
- National Living Wage to rise from £7.20 an hour to £7.50 from April next year
- A cut to the Universal Credit taper rate from 65 per cent to 63 per cent from April
- A ban on upfront fees to tenants charged by letting agents
- £1.8bn from Local Growth Fund to English regions
Read the Autumn Statement in full