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Autumn Budget 2017 – What can we expect?

The Chancellor of the Exchequer, Philip Hammond, has announced that the government will publish its Autumn Budget on Wednesday 22 November 2017. The Autumn Budget sets out the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility (OBR).

With just under a week to go there is much speculation as to what the Chancellor will introduce/reduce in his first budget since the general election writes Georgina Wright of Abbotstone Financial Solutions.

There is a lot of talk around pensions and according to FT Adviser there is likely to be a reduction in the annual allowance (the amount that can be contributed to pensions each year, while still receiving tax relief). It’s currently £40,000 with the consensus being a reduction to £30,000.

The chancellor is also expected to lower the tapered annual allowance from £150,000 to £120,000.

LoveMoney.com predicts that there will be a focus on EIS (enterprise investment schemes) and SEIS (seed enterprise investment schemes).

EIS currently offer tax relief worth 30% (up to £300,000) for investments made into qualifying schemes. Plus, a capital gains tax exemption on disposal of the shares after a set period.

They believe that the tax relief could be cut to 20% with an increase in the holding period for the qualifying shares.

Overall this is not good news for higher earners looking for an alternative to pensions!

There is further talk around the subject of stamp duty. Tax assist predicts that it could be removed for older homeowners – freeing up property for younger people. Lovemoney.com has a different view and report that they think the chancellor could scrap stamp duty altogether for first time buyers!

What do I expect?

Stella Amiss, Head of Tax policy at PWC believes that the Chancellor will want to raise revenue whilst avoiding big headlines. This may be way of levy’s rather than by raising taxes, or by fixing allowances.

I tend to agree here. I do not think that there will be radical changes and the emphasis will be on building a strong economy in the light of Brexit.

I believe there will definitely be an increase to the personal allowance (currently £11,500 per annum). The Conservative Manifesto pledged to increase the allowance to £12,500 by 2020 so we do expect some level of increase.

The spring budget announced a reduction in the dividend allowance from £5,000 to £2,000. I expect this will be touched on in the budget next week. This is likely to have the biggest impact on those receiving an income by way of dividends and how to best manage this income going forward so as to minimise tax.

Although the Conservatives are trying to interest a younger generation they could well stab themselves in the foot if they proceed with both cuts to the pension annual allowance and the tapered annual allowance alongside reviewing the benefits offered by EIS.

References

I have been working in financial services since 2001. I aim to establish a long term relationship with all my clients, addressing immediate needs and also the long term objectives. My specialism is tax efficient investment planning for clients both in the UK and France. I am a Chartered Financial Planner (one of less than 1000 female chartered financial planners in the UK!) and Partner at Abbotstone Financial Solutions.

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