Key points from the Chancellor
While Philip Hammond announced that his first Autumn Statement would be his last – describing the annual event as unnecessary - he still made a number of announcements which will have far-reaching implications for your finances.
Here we outline some of the key decisions made by the Government and what differences they could make to individuals and businesses:
The tax and National Insurance advantages of salary sacrifice will be removed from April 2017 except for pensions (including advice), child care, cycle to work schemes and ultra low emission cars. Arrangements in place before April 2017 will be protected until April 2018. Arrangements for cars, accommodation and school fees will be protected until April 2021.
Buy-to-let fees banned
The Chancellor’s announcement of a ban on charging tenants letting agent fees could force more costs on landlords – yet another hit on the potential income from buy-to-let.
The ISA limit is set to rise to £20,000 from April 2017 - and Junior ISA allowances will rise to £4,128 from the same date.
The Chancellor announced plans to reduce the amount people can pay in after they have taken a taxable sum from their money purchase pension. This will reduce the limit on personal and employer contributions from £10,000 to £4,000 per year from April 2017.
Rather than simplifying one of the most complex taxes facing families, the Chancellor has given a further incentive to give money to political parties instead. IHT relief will soon be available for donations to political parties in devolved governments. Inheritance tax is complicated and any measure to simplify it would be more welcome.
The Chancellor’s promise to increase the tax-free personal tax allowance to £11,500 in April 2017 and £12,500 by the end of the current parliament will put more money in the pockets of taxpayers. For those paying higher rate Income Tax, the Chancellor’s promise to raise the threshold for 40% tax to £50,000 over the same period is a real benefit.
Termination payments over £30,000 which are already subject to Income Tax, will also be subject to National Insurance contributions from April 2018. The first £30,000 remains free of tax and National Insurance.
New national savings plan
A new three-year National Savings & Investment bond is to be made available from spring 2017 with an indicative rate of 2.2%. This will allow anyone aged 16 or over to put away between £100 and £3,000.
Keep an eye on our blog section for further analysis of some of the key Autumn Statement announcements and how they could affect you.