The Autumn Budget – Our View

As trusted providers of financial planning services in Windsor and beyond, we think it’s important to provide you with a quick debrief on how the recent Autumn Budget might impact you. Below we’ll explain how Philip Hammond’s latest Budget will actually affect you and your finances.

For taxpayers…

There was good news for taxpayers in the Autumn Budget. The Chancellor had previously announced his intention to increase the Personal Allowance to £12,500 from April 2020. He also promised to up the Higher Rate threshold to £50,000 at the same time.

In the Autumn Budget he brought these changes forward by a year to April 2019, so some of will see a meaningful reduction in our tax bill a little sooner than expected.

For homeowners…

Hammond also announced the extension of the relief on Stamp Duty to First Time Buyers of shared ownership properties up to the value of £500,000. This is the second year in a row that the Chancellor has extended Stamp Duty relief, further cementing the government’s attempts to help more people get onto the property ladder.

There were also some changes that will impact those selling their homes. As a homeowner, you can avail yourself of the Private Residence Relief on Capital Gains Tax charged on profits made from property. However, there were some minor changes to tighten this relief a little.

Now, if you let out your primary residence for a period, you must be in joint residence with the tenant to still qualify for full Private Residence Relief. Also, if you move out towards the very end of the period of ownership, you will only qualify for the relief if this takes place within nine months of the sale date.

For savers and investors…

There was very little in the budget to interest savers this Autumn. Hammond did, however, offer a small crumb to parents saving for their kids’ futures with an increase in the Junior ISA and Child Trust Fund tax-free limit to £4,368.

And for National Savings and Investment (NS&I) savers, there was good and bad news. On the one hand the government said it wants to attract more people to Premium Bonds by relaxing rules on parents buying them for their children. It is also planning to reduce the minimum purchase of the bonds and release an app to make them even more attractive to savers. On the other hand, those who invested in NS&I’s index-linked savers certificates, will see their returns reduced significantly as the interest will now be linked to the Consumer Price Index, as opposed to the Retail Price Index (reducing the interest from 3.3% to 2.4% as things stand today). This is likely to leave around 500,000 people rather disappointed.

For pension savers…

Although many of us expected changes to the pension tax relief regime, this didn’t come up. However, the Lifetime Allowance, which is the limit on the value of the private pension each person can draw from before they are taxed, will increase a little to £1,055,000, from £1,030,000 from April 2019.

Our conclusion…

Despite all the talk of the ‘end of austerity’ and increased economic growth projections, there was very little in this Budget to suggest anything much has changed. It seems that the shadow of Brexit is simply looming far too ominously for Hammond to make any significant moves towards putting cash back into people’s pockets just yet.

 

 

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