The Old News

The new Chancellor’s first (and last) Autumn Statement contained little to interest us from a personal finance perspective. As usual, the Government confirmed several changes that had already been announced some time ago, including:

  • The rise in the standard personal allowance to £11,500 and the increase in the 20% tax banding which means the effective threshold at which 40% tax becomes payable will rise to £45,000 (assuming eligibility for the full standard personal allowance)
  • The increase in the ISA allowance to £20,000 for the 2017/18 tax year starting on 6 April
  • The introduction of the Lifetime ISA which will be available to those aged under 40 and which sees the Government add bonuses to boost the value of the accounts. However, there are restrictions on withdrawals. We will cover this in more detail in a future article.
  • The annual subscription limit for Junior ISAs and Child Trust Funds will increase to £4,128.

 

The New News

  • Salary sacrifice schemes: The tax and NIC advantages of most salary sacrifice schemes will be removed from April 2017 as previously proposed, but there will be some transitional protections. Arrangements relating to pensions will not be affected.
  • The pensions money purchase annual allowance (MPAA) will be reduced from £10,000 to £4,000 from April 2017. This limit applies to pension contributions that can be made by people who have already accessed their pensions flexibly and under the current rules may be obtaining tax relief on up to £10,000 of recycled pensions income.
  • The standard rate of insurance premium tax will rise from 10% to 12% from 1 June 2017.
  • National Savings and Investments (NS&I) bond: For one year from April 2017, NS&I will offer a new ‘market leading’ three-year savings bond. The indicative rate is 2.2% but this may be adjusted to reflect market conditions at launch. The bond will be open to people aged 16 and over, subject to a minimum investment of £100 and a maximum of £3,000.

 

The Bad News
 
The emphasis of the Chancellor’s speech was on increased infrastructure spending, a stop on further new welfare savings measures and an acceptance that government borrowing will be significantly higher than previously projected.

The Institute for Fiscal Studies, the independent think-tank said that even by 2021, real wages in the UK – pay adjusted for inflation – will still not have recovered to their 2008 level -before the global financial crisis.