2016 Autumn Statement – Winners & Losers!

In November 24, 2016
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british-chancellor-of-the-exchequer-philNow the dust has settled here is what we know…

The Chancellor delivered his first and last Autumn Statement, announcing that the Autumn Statement will become the Autumn Budget and in the spring we will have a Spring Statement.

There were very little surprises in this year’s statement and unsurprisingly, after the decision to leave the European Union, the announcements from Mr. Hammond are largely focused on promoting growth and productivity of the UK economy!

Whilst growth is forecast to be up this year, it has been downgraded for the next few years in light of the uncertainty around Brexit. So who are the winners and losers?

The Winners!

Workers:

  • Income tax threshold to be raised to £11,500 in April, from £11,000 now.
  • Higher rate income tax threshold to rise to £50,000.
  • National Living Wage to rise from £7.20 an hour to £7.50 from April next year.

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Business:

  • Doubling UK export funding capacity.
  • £400m into venture capital funds through the British Business Bank to unlock £1bn in finance for growing firms.
  • Corporation tax to reduce the rate of corporation tax to 17% by 2020. The rate of corporation tax from 1 April 2017 will be 19%.

Drivers:

  • Fuel duty will be frozen for a seventh year. The chancellor said this would save the average car driver £130 and the average van driver £350 a year.

9584116_sSavers:

  • For one year from April 2017, NS&I will offer a new three-year savings bond. The indicative rate is 2.2% but this may be adjusted to reflect market conditions at launch. The bond will be open to people aged 16 and over, subject to a minimum investment of £100 and a maximum of £3,000.
  • The annual subscription limit for Junior ISAs and Child Trust Funds will increase to £4,128. The main ISA subscription limit will increase to £20,000, as previously announced.

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Home Buyers:

  • Increase funding for home building, with a £2.3bn Housing Infrastructure Fund to deliver infrastructure for up to 100,000 new homes in high demand areas, and £1.4bn towards the construction of affordable homes.

Renters:

  • Lettings agents in England will be banned from charging upfront fees to tenants.

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Pensioners:

  • At Redwood, we very much welcomed the news that cold calls offering exotic investment opportunities to people cashing in their pension pots will be banned! These types of calls and scams have plagued many people for years and the announcement couldn’t come soon enough!

The Losers!

Drivers:

  • Car Insurance premium tax to rise from 10% to 12% next June.

Employers & Employees:

  • Tax savings on salary sacrifice and benefits in kind to be stopped, with exceptions for ultra-low emission cars, pensions, childcare and cycling

pension potSavers:

  • Whilst the new NS&I savings bond is good news for savers, the reality is with a low interest rate and a maximum investment amount of £3,000 the news really is very underwhelming.
  • The chancellor also announced plans to reduce the annual tax-free pension allowance from £10,000 to £4,000 in April 2017 for those who start to take money from their defined contribution pension, but wish to continue making pension contributions.

Non-Domiciled:

  • From April 2017, non-domiciled individuals will be deemed to be UK-domiciled for tax purposes if they have been UK resident for 15 of the past 20 years, or if they were born in the UK with a UK domicile of origin. Also from April 2017, inheritance tax will be charged on UK residential property when it is held indirectly by a non-domiciled individual through an offshore structure, such as a company or a trust.

The elderly:

  • Despite numerous reports, suggestions and promises from the Government, there was no mention at all was in the Autumn Statement about funding for social care or the long awaited care cap!

 

 

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What we already knew

Announcements in previous Budgets and Autumn Statements include:

  • The launch of a new Lifetime Individual Savings Account (LISA) for those aged between 18 and 40 to open from April 2017. They can save up to £4,000 a year, and the government will add a 25% bonus if the money is used to buy a home or as a pension from the age of 60.
  • The start of a gradual process in April 2017 allowing people to pass on property to their descendants free from some inheritance tax. This looks as though it will still come into force, but it is disappointing we didn’t have further clarification on exactly how it will work.
  • 37082457 - bucharest, romania - february 22, 2015: soda drinks on supermarket stand.Any family which has a third or subsequent child born after April 2017 will not qualify for Child Tax Credit, which can be more than £2,000 per child. This will also apply to families claiming Universal Credit for the first time after April 2017.
  • A sugar tax on soft drinks, expected by about 2018.
  • From September 2017, parents working more than 16 hours a week and earning less than £100,000 a year will be able to claim an additional 15 extra childcare hours.

Jasmine has been a qualified Financial Planner since 2008. She has also been a member of the Society of Will Writers since 2012. She is passionate about helping Clients build their wealth and achieve the financial lifestyle they desire. Her areas of expertise are that of Savings, Investments, Pensions and Retirement Planning.

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