Autumn Statement 2016
This was Philip Hammond’s first chance to appear in the spotlight since he was unexpectedly promoted to Chancellor following the fallout from the EU Referendum result.
However all in all this was a pretty quiet affair with nothing really for our clients to worry about.
The highlights that we feel you should be aware of are as follows:
Pension contributions if you have already withdrawn or are withdrawing from your pensions
- If you have already made use of the new pension freedom rules and have taken money out of your money purchase pension using flexi-access drawdown.
- If you decide you would like to pay money back into your pension then you will be limited to £4,000 per year from April 2017 rather than the previous £10,000 allowance.
Good news if you are receiving your government State Pension
- The government have agreed to continue with the ‘triple lock’ guarantee at least until the end of this parliament (2020).
- Meaning your State Pension will increase each year by the higher of inflation, average earnings or 2.5%.
Making pension contributions via salary sacrifice
- Whilst some non-cash benefits received via salary sacrifice will now be taxed in full this will not apply to pension saving.
- Meaning this very tax efficient method of pension saving can continue.
Increase to the personal allowance – the amount of income you can earn before paying Income Tax
- Already set to rise to £11,500 next year.
- The aim is to increase this to £12,500 by the end of the parliament (2020) and for higher rate Income Tax at 40% to not start until you have earned £50,000.
Reduced Corporation Tax for business owners
- The main rate of Corporation Tax has already been cut from 28% in 2010 to 20%.
- This will be cut again to 17% by 2020.
There were also increases to Insurance Premium Tax (so insurance premiums may go up), increases to the National Minimum and Living Wage.
A quiet budget is what we like to see, no major tinkering and no big shocks.