A useful summary of our views on the budget
As the dust begins to settle on Philip Hammond’s first (and last) Autumn Statement, the general consensus of opinion is that it was all a bit of an anti-climax. Perhaps that’s a good thing? After all, this year has already had more than its fair share of drama. Or maybe some will see it as a missed opportunity to really steady the ship as we sail through these uncertain economic times.
The Chancellor of the Exchequer was quite clear on one point. He said growth is likely to slow as the country goes through the process of leaving the EU, and that we will be forced to borrow more than previously predicted over the next four years. However he was keen to point out that “Britain is open for business” and pledged to “build an economy that works for everyone”.
The year ahead
So what can we take away from this Autumn Statement, and perhaps more importantly, how will these changes affect us on a day-to-day basis? Here’s our easy to digest roundup of the key points:
Good and bad news for pensions
As expected, there was no change to the current ‘triple-lock’ protection on the state pension. This means that payments will continue to rise each year by whatever is higher out of the rate of inflation, average earnings, or 2.5%. However there was a small change to the more flexible arrangements introduced by the Pension Freedoms reforms in April 2015. Once money has been drawn from your pension pot, the amount which can be contributed back into it tax-free, will fall from £10,000 to £4,000.
This is probably to act as a deterrent to those accessing their pension, thinking they can just replace the money at some stage and obtain tax relief; what is known as “recycling”.
Cutting the cold calls
Figures suggest that we’re subject to 250 million cold call scams each year and this is something that Philip Hammond is keen to crack down on. Under new proposals, a business will be banned from calling an individual if they’ve had no previous relationship with them. And if they break the rules, they could face a fine of up to £500,000.
Anything to stop vulnerable people being exploited has to be welcomed.
A boost for savers
The Chancellor says he hopes two million people will benefit from a new savings account being launched in Spring 2017 through National Savings and Investments. Savers will have to put in their money for a minimum of three years and can invest anything from £100 up to a maximum of £3,000. In return, their money will earn an interest rate of 2.2%.
Not as generous as it might seem. It is a pity that the maximum could not have been more, say £10,000, with a higher interest rate, as with the previously launched N S & I bonds.
An uneven road for motorists
It’s good news for motorists at the pumps as fuel duty will be frozen. That means no rise in the price of petrol or diesel, saving the average driver around £130 a year. However, any savings are likely to be offset by a 2% rise in insurance premium tax which will apply to your car, home and travel insurance, so that money won’t be in your pocket for long!
Renters to get a better deal
Philip Hammond said he wants lettings agents to be banned from charging upfront fees to tenants ‘as soon as possible’. The fees, which can run into hundreds of pounds, cover references, administration and credit checks. As currently happens in Scotland, the landlords, rather than the tenants will now have to foot the bill – though many warn it could pave the way for a rise in rental rates.
Health screening perks to be cut
Salary-sacrifice schemes let employees give up some of their salary in exchange for what has often been described as ‘middle-class perks’. But from April 2017, some of these will be phased out. Whilst pension contributions, childcare and cycling to work are safe, computers, gym membership, and health screening will be subject to tax from April 2017.
Giving employees benefits in this way is a good way of bumping up their salary package but it seems a pity that they have to tax those which lead to good health and well-being.
A small pay rise for earners
For those aged 25 or over, the National Living Wage will rise from £7.20 to £7.50 in April 2017. This is slightly less than earlier predictions but will be welcome none-the-less. For public sector workers there’s little change as their increase has already been set at 1% each year until 2020. Also taking effect from the start of the next financial year, the tax-free personal allowance will rise to £11,500, reaching £12,500 by 2020 and we will see the threshold for higher-rate tax raised to £50,000.
The biggest change
Possibly the biggest piece of news Philip Hammond had for us, was the announcement that there would be no future Autumn Statements. Instead, November will be the time the government reveals its major tax policies to us in an annual budget. This change is designed to give everyone plenty of notice before the start of the next financial year. And then from 2018, the traditional March budget will be replaced by a Spring Statement – but rather than announcing new policies, this will simply be a review of the economic forecasts from the previous year.
If you’d like to find out more about how these changes will affect you and your family, or want some advice on how to protect everything you’ve worked hard for, just give us a call on 02920 782 330. One of our friendly and knowledgeable team will be delighted to help you.