PAVING THE WAY FOR A “MATCH FIT” UK
In light of slower growth forecasts and an undeliverable surplus by 2020, the Chancellor used the Autumn Statement to announce his plan to ensure the UK economy is “match fit” for Brexit. Following hefty infrastructure and innovation investment announcements, housing and regional funding measures, he slipped in a few extras including a further increase in Insurance Premium Tax and a ban on letting fees for tenants; following consultation, the landlords alone will be liable.
In a positive reconfirmation he announced that the personal allowance will rise to £11,500 this April and then to £12,500 by 2020. In addition, the higher rate threshold will rise to £50,000 by the end of this Parliament. The government also has no plans for further welfare savings measures in this Parliament beyond those already announced, crucially protecting the triple lock arrangement.
A BIG SACRIFICE FOR SOME
The Chancellor promised salary sacrifice would be taxed as normal from April; however, pensions contributions, childcare vouchers, the cycle to work scheme and ultra-low emission company cars are excluded. Items bought under the scheme such as computers, gym membership and health screening will be subject to tax.
INTRODUCING BOND, A NEW SAVINGS BOND
The Chancellor expects two million people to benefit from a new savings bond which will be launched through National Savings and Investments in April. With an interest rate of around 2.2% and open to those aged 16 and over, the minimum investment limit is £100, with a maximum investment of £3,000. Savers must lock in their money for three years. The new product will be available for 12 months.
For those who have already flexibly accessed their pension, the Money Purchase Annual Allowance may be limited to £4,000 from April. This is designed to stop beneficiaries from gaining double pension tax relief.
The tax treatment of UK residents’ foreign pensions will be brought more closely into line with the UK’s current domestic tax regime, bringing any pension payment or lump sums into the UK for tax purposes.