It must be really difficult when you are the centre of attention for one hour each year but haven’t really got anything new to say. This was what the Chancellor faced yesterday, so no wonder he tried to concentrate on cracking jokes about driverless cars and how the government is run by two-thirds of Top Gear (May and Hammond!).
He did however, make a few announcements on tax, and as usual we have put together a summary of some of these.
Pensions
There was not a lot to announce; no change in the higher rate of tax relief and this might be because the Lifetime Allowance tax take is now £125 million!
The Lifetime Allowance increased from £1 million to £1.03 million. If your pension needs protection we will be in contact.
The state pension increased by 3% for both current and future pensions.
ISAs
This was announced just before the budget, but is worth mentioning. The key change is that on death the ISA retains the tax regime within the estate, and it can now be passed across to a spouse or civil partner.
Tax
Not much to announce but worth noting:
- The higher rate tax allowance will increase to £46,350 from April next year. But for those living in Scotland the rate is £43,000 for earnings only; this is expected to increase by inflation but is lower than the rest of the UK
- Sticking with Scotland, any savings or dividend income will be subject to the higher rate allowance (£46,350). It is also worth mentioning that potentially different tax rates will be introduced on the 14th December
- The reduction in dividend allowance comes in from April; down from £5,000 p.a. to £2,000
- The CGT allowance increases to £11,700 from April 6th
Things to watch out for
Below are some other things that came out, which may or may not have any impact:
- There is a consultation coming out to make the taxation on trusts simpler, fairer and more transparent! We are not sure what this could mean but we could expect possible changes in the Autumn Budget in 2018
- There are new anti-avoidance rules to be introduced for income and gains accruing to offshore trusts – this is not surprising, given the dislike of people squirreling money away to offshore tax havens!
- Corporation indexation allowance to be frozen from 1 January – there is a likely to be a very small impact on onshore bonds, endowments and companies investing cash directly into investments
- Changes to EIS and VCTs:
a. EIS allowance to increase to £2 million provided that any amount over £1 million is invested in one or more knowledge intensive companies
b. Knowledge intensive companies can now receive £10 million
c. Investments must be targeted at growth investments and exclude companies and arrangements aimed at capital preservation
Ultimately, Hammond is constrained in what he can do particularly as the party has no overall majority in the commons (without the help of the DUP)!
The overarching message seems to be that this is a caring party; removing stamp duty for first time buyers, giving more money to NHS and investing in next generation tech companies.
Wearing my cynical hat, house prices are slowing and anything that keeps the market going looks better for the government. It is good news that we are investing in next generation tech companies, and soon both Hammond and May can be driven to the Commons in a driverless car!
Role on the Autumn Budget 2018!
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