IN THE NEWS November 2016 Chancellor Philip Hammond delivered his first, & last, Autumn Statement on Wednesday 23rd November & here we provide a summary of the key points that will affect your personal finances. New Budget dates o This was the last Autumn Statement. After the next Budget in spring 2017, we’ll be switching to a 2017 Autumn Budget followed by a 2018 Spring Statement, with the pattern then repeating each subsequent autumn and spring. o This will give welcome breathing space between the announcement of budget changes and their introduction, and equally give us time to prepare & advise you of any imminent changes before thay are introduced. Tax Income tax o Personal allowance will increase to £11,500 in 2017/18. o Higher rate tax threshold will rise to £45,000 in 2017/18. o Income tax rates. 0% starting rate on savings income up to £5,000, and additional rate threshold all remain unchanged for 2017/18. o The government remains committed to delivering a personal allowance of £12,500 and higher rate tax threshold of £50,000 by the end of the current parliament. Salary exchange o Following consultation (back in August 2016), the tax and employer NI advantages of salary sacrifice schemes will be removed from April 2017, except for arrangements relating to pensions (including advice), childcare, Cycle to Work and ultra-low emission cars. o This will mean that employees exchanging salary for benefits will pay the same tax as the vast majority of individuals who buy them out of their post-tax income. o Arrangements in place before April 2017 will be protected until April 2018; and arrangements for cars, accommodation and school fees will be protected until April 2021. Insurance Premium Tax (IPT) o This 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. Inheritance Tax o The current nil rate band of £325,000 will remain frozen at this level until April 2021. o From April 2017 an additional nil rate band will apply where a residence is passed on death to a direct descendant. The residence nil rate band will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 where assets are passed on death to direct descendants. Corporation Tax o The current rate of corporation tax is 20%. The chancellor also confirmed his commitment in the Autumn Statement to reduce the rate to 17% by 2020. Capital Gains Tax (CGT) o There was no mention of any change to either the rates of CGT or the annual exempt amount. We expect any uplift in the annual exempt amount to be announced in spring 2017. Pensions Money Purchase Annual Allowance (MPAA) o The plan is to reduce this to £4,000 from April 2017. o By way of background, once a person has accessed pension savings flexibly, if they wish to make any further contributions to a defined contribution (DC) pension, tax-relieved contributions are restricted to a special MPAA. o A consultation has been published alongside the Autumn Statement seeking views on the proposal to reduce it to £4,000. (Note that just taking a tax free cash sum doesn’t trigger the MPAA.) . Pension scams o A consultation on the options for tackling pension scams including pensions cold calling will shortly be published. It is hoped this will give firms increased powers to stop suspicious transfers and abuse of small self-administered schemes. Triple Lock o The State Pension is protected by a triple lock, which means that it increases each year in line by the higher of inflation, the increase in average earnings or 2.5%. o In his speech the Chancellor confirmed the pledge to keep the triple lock to the end of the current Parliament, but also announced the policy would be reviewed in the next Parliament. Foreign pensions o The tax treatment of foreign pensions will be more closely aligned with UK pension tax rules for UK residents. Foreign pensions and lump sums will be taxed in the same way as UK pension schemes for anyone returning to the UK. The government will also close specialist pension schemes for those employed abroad to new savings. ISAs o The 2017/18 annual subscription limit for ISAs will rise to £20,000 as announced in the 2016 Budget o Junior ISAs and Child Trust Funds annual subscription limits will see a CPI linked rise to £4,128 in 2017/18. National Insurance o The National Insurance secondary (employer) threshold and the National Insurance primary (employee) threshold will be aligned from April 2017, meaning that both employees and employers will start paying National Insurance on weekly earnings above £157. This should simplify the payment of National Insurance for employers. o The upper earnings limit will increase from £827 per week to £866 per week o As announced at the 2016 Budget, Class 2 NICs will be abolished from April 2018, simplifying National Insurance for the self-employed. The Autumn Statement confirms that, following the abolition of Class 2 NICs, self-employed contributory benefit entitlement will be accessed through Class 3 and Class 4 NICs. Savings NS&I Investment Bond o A new 3 year savings bond to be launched to help savers who have struggled with low interest rates. o The indicative rate is 2.2% but this is subject to change. Savers aged 16+ will be able to invest between £100 and £3,000 and the bond will be available for 12 months from Spring 2017. Miscellaneous National Living Wage o This is to rise 4.2% from £7.20 to £7.50 per hour, which is a pre-tax increase of £10.50 per week for someone working a 35 hour week. A ban on Letting Agent fees for tenants o This is intended to improve competition in the rental market and make fees for renters more transparent. o There will be a consultation on this from the Department for Communities and Local Government (DCLG) before it is written into legislation. Tampon tax o £3 million will be awarded from the controversial Tampon Tax. o This will be passed to Comic Relief to distribute between a range of womens’ charities, including those that tackle violence against women and girls. As always, if any of the above prompts any questions, or you need any help, please do not hesitate to contact us . The information provided is based on our current understanding of the 2016 Autumn Statement and associated documents and may be subject to alteration as a result of changes in legislation or practice.