Shoosmiths' response to the Autumn Statement

Shoosmiths' response to the Autumn Statement


Author: Kara Shadbolt


"In today's Autumn Statement, the Chancellor announced that further changes to the EIS/VCT regime would be made in the Finance Bill 2017. Given the upheaval that the EIS/VCT regime has been through over the past year or so, the thought of any further changes could generate a collective sigh of despair. However, whilst we have very little detail of the changes (more will become available on 5 December), it does appear at first sight that the changes are nothing like as significant as in recent years and do offer some cause for optimism. In particular, the announcement that the government will launch a consultation into options to streamline and prioritise the advance assurance procedure is most welcome - this is the major issue facing EIS and VCT investors and is putting them at a competitive disadvantage to non-tax advantaged investors. It remains to be seen what options the government will announce for dealing with this, but whilst the government committing more resource to the processing of such applications is probably wishful thinking, we would imagine that their options would include separating simple and complex applications.

The other changes are around clarifying the EIS rules for share conversion rights, which follows the completion of HMRC's general review of share conversion rights and the impact on EIS relief; introducing the power to enable VCT regulations to be made to provide greater certainty to VCTs in certain share for share exchanges, and tidying-up the VCT legislation around follow-on funding. At first glance, all of these look potentially helpful.

The main disappointment for both EIS and VCT investors is the announcement that the government will not be introducing the replacement capital rules at the moment and will review this over the longer term - it sounds to me like this is being kicked into the long grass, but I may be overly cynical!"

- Tom Wilde, tax partner at Shoosmiths LLP


"Since the new 'pension freedoms' were introduced in April 2015, there has been a significant increase in the number of pension scams whereby people are told that their pensions can be 'unlocked' and then spent as cash. Such scams have caused many individuals to lose a good deal of money to these cold-callers.

We welcome the Chancellor's announcement to ban cold-calling in relation to pensions. Assuming that the ban reduces the number of cold calls (which it should), there should also be fewer corresponding requests to pension schemes for transfer values and, therefore, the move should ease the burden on the scheme administrators and trustees who have to deal with member requests. The knock-on effect of this should mean a reduction in the risk of penalties from the Pensions Regulator and Pensions Ombudsman which can apply where trustees/ administrators delay making a transfer or refuse to make it altogether. Overall the announcement is a positive step in ensuring the protection of peoples pensions."

- Paul Carney, employment and pensions partner at Shoosmiths LLP

Investment in public sector transport and infrastructure

"I welcome the government's continued support for HS2 which is strategically important in providing additional capacity for the UK rail network. In addition to providing faster movement of passengers between a number of key cities, HS2 will create additional capacity for freight movements on the existing north-south routes as well as providing more opportunities for local rail services and new routes on the existing network.

The focus on funding and encouraging more research and development is also extremely welcome. Building on the current training programmes for the rail industry it will help to increase the products and services the UK rail industry can offer particularly to the export market where British innovation is still highly sought after."

- Martin Fleetwood, transport & infrastructure partner at Shoosmiths LLP


The North

"I think it's fair to say the Autumn Statement was somewhat light on detail. While we did hear a commitment to improve regional infrastructure as expected, whether the £1.1 billion pledged will be sufficient, and if it will be invested quickly remains to be seen.

Beyond a pledge to working with Transport For The North, there was little mention of HS3, which would have been welcome as East-West connectivity should be an urgent priority.

The Chancellor's updated 'Northern Powerhouse Strategy' document, published alongside the Autumn Statement, did importantly reaffirm the Government's commitment to the agenda, which is clearly good news as there were fears over the summer that it may have been shelved."

- Andrew Pattinson, real estate partner, Shoosmiths LLP


"As expected, the Chancellor announced a rise in the national living wage of 30 pence, taking it to £7.50 for workers aged 25 and over from April next year and moving closer to the government's stated target of £9 per hour from 2020. As a result of the alignment between the rates of the national minimum wage ("NMW"), which is usually increased in October and the national living wage ("NLW"), which was introduced last April, businesses will have to cope with two increases to the NMW in six months. Increases to the existing NMW rates from April 2017 were also announced by the Chancellor, the adult rate for workers aged 21-24  will rise to £7.05.

Not only does this result in an extra administrative burden but, the financial impact will be considerable for sectors such as social care, hospitality and retail. A rise in wages has a knock on effect on national insurance contributions and employer pension contributions. Understandably, employers will be looking to pass on increased staff costs to consumers where possible, which is likely to feed into inflation figures. As we saw when the NLW was first introduced, employers making savings by reducing employee benefits and postponing pay rises is also a possibility."

- Kevin McCavish, head of employment at Shoosmiths LLP