The Chancellor delivered his Autumn Budget to Parliament this week and we’ve been paying close attention to the announcements and how they will impact on our clients.
In this article, we’ve provided an overview of the key points for you.
Lifetime and Annual Allowances
The lifetime allowance for pension savings will increase to £1,055,000 for the 2019/20 tax year. The Annual Allowances (Standard, Money Purchase and Tapered) will remain unchanged.
The government is taking steps to support the launch of Pension Dashboards – innovative tools that will allow an individual to see their pension pots, including their State Pension, in one place. The DWP will consult later in 2018 on the detailed design for this dashboard and on how an industry-led approach could harness innovation while protecting consumers. The DWP will work closely with the pensions industry and technology firms and extra funding has been provided in the budget towards making this happen.
Pensions for the self-employed
In the winter, the DWP will publish a paper setting out the government’s approach to increasing pension participation by the self-employed. This follows the 2017 review of automatic enrolment and will focus on expanding evidence through a programme of targeted interventions and partnerships.
All tax rates are to remain the same, however, the personal income tax allowance will rise to £12,500 in the 2019/20 tax year, one year earlier than originally planned. The higher rate threshold will increase to £50,000 and the zero percent starting band for savings income will remain at £5,000.
The savings allowance is to remain at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.
The dividend allowance will remain unchanged at £2,000.
The ISA threshold will remain unchanged at £20,000 for the 2019/20 tax year. For Junior ISAs, the threshold will rise in line with the Consumer Prices Index (CPI) to £4,368.
Capital Gains Tax
The annual exemption will be £12,000 for individuals and £6,000 for trusts in the 2019/20 tax year.
From April 2020, the government will reform lettings relief so that it will only apply in certain circumstances. This will restrict the reliefs that are currently available to people who haven’t lived in their home for the full period of ownership and also to people who have let out their homes.
Tax treatment Of Trusts
The government again announced a consultation into the tax treatment of trusts. This consultation will look at making the taxation of trusts simpler, fairer and more transparent. Currently there is still no date for its publication.
Stamp Duty Land Tax (not applicable in Scotland)
Relief for first time buyers of property will be extended to shared ownership, so there will be no Stamp Duty Land Tax (SDLT) on an initial share purchased for up to £300,000 where the property is valued at up to £500,000. SDLT on the purchase price of the share over £300,000 will be at 5%. This change is being backdated to 22nd November 2017.
To support longer term business investments, new qualifying conditions for entrepreneurs’ relief were announced. This is a relief that fixes the CGT rate at 10% for individuals selling interests in their businesses and personal companies.
The relief is being restricted from 29th October 2019 so that when the disposal is of shares in a personal company, the relief is only available if the individual selling the shares has an interest of 5% or more in both the business’ distributable profits and net assets.
The qualifying ownership period for entrepreneurs’ relief will also change for most disposals from 6th April 2019 onwards, increasing from one to two years.
Capital allowances for investment by business
To stimulate business investment in response to Brexit, businesses will be able to claim faster tax relief for investment in plant and machinery from 1st January 2019. The usual maximum limit on which Annual Investment Allowance can be claimed is £200,000 but this will increase to £1million for two years. An allowance for new non-residential buildings is also being introduced as part of a package of wider capital allowances changes.
Tax changes for consultants
The off-payroll working rules (IR35) will be extended to medium and large private sector organisations from April 2020. This will make the employer or agency responsible for operating the tax and National Insurance rules on their consultants as if they were employees.
Get in touch to find out more about how the 2018 Autumn Budget will affect you
To find out more about how these latest announcements may impact on your financial position, please telephone us on 01772 729742 or alternatively, simply fill out our online enquiry form to arrange a meeting with an adviser at Springfield Financial Services.
Please note that the information provided is based on our current understanding of the 2018 Autumn Budget and associated documents and may be subject to alteration as a result of changes in legislation or practice.