Autumn Statement 201624 November 2016
Speculation is usually rife prior to a full Budget, which is normally held in the spring of each year. Up until only a few years ago, the Chancellor's Autumn Statement was almost a note to the accounts of 'UK Plc', rather than the important economic mid-season event it has become (with, it appears, the same level of speculation being applied to it). Ironically, this November's speech was notably important because not only did it encompass the views of our new Chancellor, Phillip Hammond MP, and of course the new regime of our post-Brexit vote Government, it also put an end to the Autumn Statement. Spring 2017 will be the final spring Budget and from autumn 2017, the main Budget for Britain will be announced in the autumn, with a spring statement from 2018 responding to the twice-yearly forecast from the Office of Budget Responsibility (OBR).
What were the headlines that grabbed the team at Chapters Financial who gathered around the screens on 23 November 2016 to take in the new financial data being detailed? The key points we took from the statement were as follows:
- Tax savings on salary sacrifice and benefits in kind are to be stopped from April 2017, with exceptions for ultra-low emission cars, pensions, childcare and cycling. So salary sacrifice pension contributions are safe for the moment (but watch this space).
- For those who have drawn income from their money purchase pension plans, the amount they will be allowed to contribute into a pension plan (the Money Purchase Annual Allowance/MPAA) will reduce to £4,000 (from £10,000 currently).
- Freeze on fuel tax duty for seventh successive year.
- The triple lock on State Pension benefits is preserved, but will be reviewed in the next parliament, in the light of the challenges of rising longevity and fiscal sustainability.
- Insurance Premium Tax to rise from 10% to 12% from June 2017
- Corporation Tax to fall to 17% by 2020 as promised in the Budget
- Tax-free personal allowance to rise to £11,500 in April 2017 as expected. This is to rise further to £12,500 by the end of the current parliament, and to rise in line with inflation thereafter. The level at which individuals start paying higher rate income tax is set to rise to £50,000 by the end of the current parliament.
- A new savings bond will be launched through National Savings & Investments (NS&I). Full details will be announced at the next Budget – however, the rate of interest is likely to be around 2.2% pa gross AER, with a term of three years and a maximum investment of £3,000 per individual.
I have said this before and this event is no different: the devil will be in the detail. However, we hope that the key points noted above add additional help in considering your financial planning. One key point is that planning your financial position never stands still.
If you would like to consider your financial planning a stage further, possibly taking into account some of the changes noted above, then please contact the team at Chapters Financial in Guildford or Woking. As always, no individual advice is provided during the course of this Blog.
Keith Churchouse FPFS
CFP Chartered FCSI
Chartered Financial Planner