The end of the Autumn budget
New Chancellor, Phillip Hammond proposed the first Autumn budget yesterday. This turned out to be the last Autumn budget that we will see in its current guise. There are plans to move the main budget announcement to next Autumn, and a Spring ‘review’ on fiscal policy. Rather than any actual changes, his first post-brexit moment in the limelight didn’t throw up any shock surprises.
We have summarised the main changes below, and you’ll notice there isn’t much there. Are the politicians still scrambling on what Brexit means and how to go about it? This might explain why there wasn’t really much to talk about.
Summary of announcement
- The government has proposed to reduce the money purchase annual allowance (MPAA) from its current level of £10,000 to £4,000 from 6 April 2017. Consultation on this change will run until 15 February 2017 with the government confirming the proposed change in Budget 2017, so there is still room for plans to change. Why this proposal? – The government does not believe that an MPAA of £10,000 is appropriate or needed on an ongoing basis and proposes that the MPAA is set at a level that focuses government support on those who genuinely need, rather than simply choose, to draw on their pension savings.
- The tax and National Insurance benefits of most salary sacrifice schemes will be removed from 6 April 2017 (pensions are not affected). Some schemes will not be affected such as
- Pensions (including pension advice)
- Childcare
- Cycle to Work
- Ultra-low emission cars
Salary Sacrifice
All other salary sacrifice arrangements in place before 6 April 2017 will be protected until 5 April 2018, and salary sacrifice arrangements in place before 6 April 2017 for cars, accommodation and school fees will be protected for up to 4 years (until 5 April 2021). If you’re thinking about making the most of a salary sacrifice scheme, put plans in place before the end of the tax year.
- There will be a new savings bond introduced, managed by NS&I, which will have a return of 2.2% with a maximum input of £3,000.
- The current ISA allowance will rise from £15,500 to £20,000 after 6th April 2017
- Personal income allowance will rise from £11,800 to £12,500 before incurring tax and the higher rate will increase to £50,000. These will both take place before the end of Parliament and will follow CPI thereafter.
- No movement on the pension triple lock.
Pension Scams
From a pension protection angle, the Chancellor talked about measures to crack down on pension scams such as banning cold calling on pensions. IEP Financial welcomed this announcement, having seen first-hand the devastating effects of savers who have not used FCA authorised financial advice.
If you have any questions about how the Chancellors Autumn statement may affect you and your financial portfolio,
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