However, this was most definitely a pro-business statement aimed at reassuring firms that not only is the UK open for business but it is “match fit” should EU turbulence head our way.
Teresa May set the scene at the beginning of the week when she discussed her plans with the business community at the CBI conference on Monday. Because of that, businesses knew a lot of what to expect.
We knew the Government wanted the UK to have the lowest corporation taxes in the G20 – and, no, that didn’t mean 15%.
We knew about the extra £2bn a year in R&D and a patient capital review to address the long-term investment issues businesses are facing.
We also knew the Government had a clear objective to tackle the long-standing problem of productivity.
All are good business-friendly intentions, designed to help businesses succeed and support the UK economy in times of uncertainty.
But what did SMEs and ambitious businesses want? And what did they get?
Put simply, businesses want three things: certainty, fairness and simplicity. With Brexit around the corner and no clear idea of what our exit from the EU yet looks like, firms are well aware that there could be bumps in the road ahead and it was unfair to expect Hammond to provide real certainty at this stage.
He does, however, appear to be a safe pair of hands for the UK economy, sticking to the corporate tax roadmap to provide certainty, while focusing on a new fiscal framework that makes us ‘match fit’ in a post-Brexit world. He played it relatively safe, with one eye on targeted investments and the other on managing the deficit.
He kept his post-Article 50 plans close to his chest. With the economy ticking along quite smoothly, he wanted to give the Government the opportunity to respond and take more drastic economic action should a downturn come along once Article 50 is triggered.
The Government seems pretty focused on ensuring the UK is a fair and transparent tax destination for business. I am not surprised Hammond is pressing ahead with the Base Erosion Profit Sharing (BEPS) agenda. It is a good revenue raising programme for the Exchequer, with the restriction on corporate interest deductions for example set to collect £1 billion per year.
In terms of tax simplification, businesses saw some progress. The Chancellor acknowledged the scale and complexity of UK tax legislation when he announced his first real tax simplification action – having just one major fiscal event each year from 2018, the Autumn Budget.
Businesses will welcome this move. The impact won’t be immediate but it is a step in the right direction and will make it easier to plan for the long-term, could improve the quality of legislation and result in less frequent change for businesses.
He also touched on the alignment of employees’ and employers’ national insurance thresholds - but Hammond could have taken it much further to align income tax and national insurance rules. More than half of the businesses we recently polled had this as their number one simplification measure to help reduce the administrative burden and bring employment taxes into the 21st century.
Businesses will be disappointed that more wasn’t done to progress tax simplification. UK tax legislation is almost 20,000 pages long. From a business perspective, the sheer volume and complexity of tax law is a major obstacle to growth.
All in all, the Autumn Statement delivered positive news for SMEs with only a few unwelcome surprises.
The changes to salary sacrifice schemes will impact many businesses; it is a popular and well-engrained remuneration tool for employers. Although a number of benefits will not be eligible for tax efficient salary sacrifice from April 2017, the changes will be phased in and were not as drastic as expected. Some core benefits will remain eligible including for pensions and ultra-low emission vehicles and so businesses should seek advice before taking action.
In addition, the £2bn annual fund to support R&D investment will take time to trickle through or impact businesses positively.
R&D reliefs are popular with SMEs; they are genuine triggers that boost investment in innovation and technology. However, businesses should be aware that the £2bn figure is misleading. R&D reliefs are a form of EU state aid rules and it would be difficult – if not impossible – to see how the Government can action this pre-Brexit without it being detrimental to the UK’s negotiations with the EU.
The devil will be in the detail but, realistically, there will be limited action here until we have triggered Article 50.
David Brookes is a tax partner at BDO