Autumn Statement 2016

Philip Hammond has delivered his first Autumn Statement and the first since the UK voted to leave the EU. The Chancellor reiterated that “Britain is open for business”. He pledged to “build an economy that works for everyone”.

Following this there were no huge surprises from a financial planning perspective as the statement largely focused on job creation, infrastructure spending, lowering taxes and raising earnings.

Below is an overview of the key points from Finura’s perspective:

TAXATION/PAY

• Income tax personal allowance to be raised to £11,500 in April, an increase of £500
• Higher rate income tax threshold will rise to £45,000 in 2017/18 and to £50,000 by the end of the Parliament
• Following consultation earlier this year in August, tax savings on salary sacrifice and benefits in kind will be removed from April 2017, with exceptions for ultra-low emission cars, pensions (including advice), childcare and Cycle to Work

PENSIONS

• Money Purchase Annual Allowance (MPAA) to be reduced from £10,000 to £4,000 from April 2017

BENEFITS

• Universal Credit taper rate to be cut from 65% to 63% from April at a cost of £700m, meaning that for every £1 earned after tax above an income threshold, those receiving benefits will now keep 2 pence more per pound than previously.

SAVINGS

• A new 2.2 per cent savings account is being launched through National Savings and Investments letting customers save up to £3,000. The account is subject to a minimum investment limit of £100.

HOUSING

• Ban on upfront letting agent fees “as soon as possible” to help make it more affordable for tenants.
• £2.3bn housing infrastructure fund to help provide 100,000 new homes in high-demand areas

BUSINESSES

• The intention to reduce the rate of corporation tax to 17% by 2020 has been reaffirmed
• £400m to be injected into venture capital funds via the British Business Bank to unlock £1bn in finance for growing firms
• The government will limit the amount of profit that can be offset against losses carried forward to 50%. This will only apply where profits are greater than £5,000,000.
• Businesses will be able to use carried forward losses against profits from other sources of income or from other group companies.

OTHER

• Insurance Premium Tax (IPT) will increase from 10% to 12% from 1 June 2017. IPT is a tax on insurers and it is up to them whether and how to pass on costs to customers
• Reforms to compensation for whiplash to cut the cost of motor insurance
• Fuel duty rise cancelled saving average car driver £130 and van driver £350 a year

Source: http://www.bbc.co.uk/news/uk-politics-38075649 and https://www.sanlam.co.uk/Services/Financial-Advisers/Support-Material/Autumn-Statement-2016.aspx?utm_campaign=Autumn+Statement+2016%3A+Our+Summary