There was the usual amount of speculation prior to this year’s Autumn Statement. In the end, there was actually no major overhauls of pensions or tax. Below are what I feel are the key points…
Reduced Money Purchase Allowance
For those clients who have accessed their pensions through drawdown, the Chancellor has cut the amount they can pay into pensions from £10,000 per annum to £4,000 per annum. This makes the decision to take funds out of pensions even more key, as it becomes harder to replace funds once they have been accessed.
Tax Rates & Allowances
The Chancellor has reaffirmed the tax rates that apply from April 2017. The personal allowance will rise to £11,500 and the higher rate threshold will rise to £45,000. The plan is to raise the personal allowance to £12,500 and the higher rate threshold to £50,000 by the end of this parliament.
National Insurance (NI)
Employee and employer NI rates will be aligned from April 2017. This is likely to cost employers an additional £7 per employee per annum.
The ISA allowance will rise to £20,000 in April 2017.
NS&I will be offering a new 3 year bond with an expected rate of 2.2% at some point in the Spring of 2017. The bond will have a minimum investment of £100 and a maximum investment of £3,000. More details will come out nearer the time.
Insurance Premium Tax (IPT)
IPT will rise from 10% to 12% in June 2017.
The government intends to cut Corporation to 17% by 2020.
The tax and NI benefits of salary sacrifice schemes will be removed from April 2017. There are a few exceptions to this including pensions, childcare, cycle to work and ultra low emission cars. I have a slight worry that this could be extended to the areas of exception, but the only solution is to watch and wait.
The biggest shock was the announcement from the Chancellor that after the Spring 2017 budget, the budget will be delivered in Autumn, giving more time to implement changes before the start of the next financial year.
As ever the devil is in the detail, but further updates will be made as the detail becomes available.
Very best wishes,
Clear Vision Financial Planning Ltd