Our Managing Director, Paul Northmore gives his view on the Autumn Statement
It was an Autumn Statement with ‘no real surprises’ from the Chancellor Philip Hammond. Here we look at the headlines and what’s happening in April 2017.
Income and Salary sacrifice schemesSalary sacrifice schemes are to be scaled back meaning that employees who give up part of their salary in exchange for goods and services, be it a mobile phone contract or gym membership, will no longer be able to have tax and national insurance relief on these items.
There will be some schemes not affected, these are:
Ultra low car emissions
Cycle to work scheme.
Deductions taken before tax for pensions will still continue.
If your salary sacrifice scheme is in place before April 2017, it will be protected until April 2018, with more expensive agreements carrying on until April 2018.
The amount that an individual can receive before paying tax will increase to £12,500 by the end of the current parliament – 2020. There will be a rise to £11,500 in April 2017. The Higher Rate Threshold will rise to £50,000 by 2020-21
The National Living Wage will increase from £7.20 to £7.50 in April 2017.
The Chancellor also announced a new NS&I Investment Bond that will offer a rate of 2.2% in spring 2017. It will give savers the opportunity to put away between £100 and £3,000 and be available to those aged 16 or over.
As previously announced, the ISA allowance will be £20,000 from 6 April 2017.Pensions – Clamp down on double tax relief
The amount that you can save into your pension pot once you have withdrawn from it has been reduced.
Under the pension freedoms from April 2015, people have been able to pay in up to £10,000 a year into their pension. However the Autumn Statement confirms that from April once you have touched your pension the amount you may re pay to take advantage of tax relief, will now be £4000.
If you have already used the money purchase annual allowance you could now consider bringing forward any planned contributions before this is capped at £4000 in April.
Talk to your adviser about you options when dealing with pension freedoms.
The statement did seem to be aimed at helping businesses and making UK investment more attractive. Corporation tax for business to continue to reduce from current 20% to 17%. This is now the lowest in G20.
Export finance will be doubled and £400m will be injected into venture capital firms via the British business bank, which the Chancellor hopes will reduce takeovers of British tech start-ups by foreign buyers.
What else starts in April 2017?
People will be able to pass on their property to their descendants to the value of £100,000.
The new Transferable Main Residence Allowance (TMRA) will be added to the Inheritance Tax threshold of £325,000, so in total it will allow each individual to pass on £425,000 with no tax payable – this equates to £850,000 per couple.Lifetime Individual Savings Account (LISA)
In April a Lifetime ISA will be introduced for the under 40s who seemingly do not have as good a deal as the older generation when it comes to pension provision.
For every £4 saved in an ISA, the government will add £1 – a 25% bonus. The annual bonus can be paid up until the age of 50.
The Autumn Statement is to be abolished. In Autumn 2017, there will be an Autumn Budget and then in Spring 2018 there will be a Spring Statement responding to forecasts from the OBR. However, the government reserves the right to make tax changes in the Spring Statement if necessary.
As always, if you have any questions regarding the announcements call to talk to your adviser on 01752 837950.