Here is a quick rundown on the changes announced by Phillip Hammond in the Autum Statement. To read the changes already announced by George Osbourne, please read our previous Budget Review,
Loophole closing. Many over 55's have accessed their private pensions early, under recent regulations. Up to 25% of it can be made available to them, tax free, each year, while at the same time they have been able to continue to contribute £10,000 per year, in to this same private pension. From April 2017, anyone who starts withdrawing from a private pension can only reinvest a maximum of £4,000 a year.
If you had plans to invest more than £4,000 into a private pension, that you'd already started drawing from in April 2017, then you may wish to consider doing so before then.
The £40,000 contribution limit per year before drawing from your pension, and the £1m lifetime allowance of total contributions allowed to a private pension, are, as yet, unchanged.
New Government backed Savings Bond announced today. From April 2017, those over 16 years old, can earn an expected 2.2% AER interest for three years on a maximum £3,000 saving. This means savers will be able to earn a maximum of £66 interest a year from the bond.
With the average 3 year saving bonds AER rate of those available at the moment being 1.62% or under, this is a respectable return, for the current climate. It may even help push interest rates, being offered by banks, upwards.
Salary Sacrifice Schemes Targeted
Salary sacrifice schemes, offer employees, ways to reduce the tax and NI they pay. By allowing employee pay for certain items and products out of their pre-tax, or gross income, they reduce the gross salary amount subjected to income tax and NI. This can be extremely useful to those employees who are hovering just above a tax bracket, reducing their income enough to move them into a lower income tax bracket. Today, Philip Hammond announced measures to tighten up the availability of such schemes when it came to lifestyle choices, like gym membership, company cars, mobile phone contracts. He did say there would be exceptions made to salary sacrifice schemes that referred to pensions, childcare, cycle to work and low car emissions schemes.
It would appear that if you are already on a scheme which is to be targeted, or you join one by next March, you may be able to keep the tax benefits until April 2018 or even April 2021.
National Living Wage
A 30p increase in the National Living Wage was announced today. The Government has previously said it plans to raise the National Living Wage to £9 per hour by 2020.
|NATIONAL LIVING WAGE||NATIONAL MINIMUM WAGE*|
|Age 25+||Age 21-24||Age 18-20||Age under 18||Apprentice|
|From April 2017:||£7.50||£6.95||£5.55||£4.00||£3.40|
Universal Credit Taper Rate Reduced
At present, those on Universal Credit, have their benefit reduced gradually, once they earn over a certain work allowance figure, which changes, depending on which welfare payments they are in receipt of. Once over this work allowance figure, their Universal Credit is reduced by 65%, meaning they lose 65p of every £1 they earn over the allowance threshold. After April, Hammond has announced that this taper rate will fall to 63%, meaning an increase of 2p for every pound earned over the allowance figure.
There is a freeze on fuel duty, for the moment, so no need to rush the pumps just yet.
Fuel may not be going up in cost but....
Insurance Premiums Hike Likely
Insurance premium tax (IPT) will increase from 10% to 12% as of June 2017. It is likely to bring about another hike in insurance premium rates for the consumer as Insurance Companies pass on the cost of this rate rise.
Del-Boy tax break
New Tax Relief for those who buy and sell, such as at car boot sales and online Auction sites. From April 2017, the first £1,000 a year of income will not be taxable.
There will be similar relief for the first £1,000 of property income, such as from letting your room via a website.