There were no major surprises in this year's Autumn Statement which are significant for our clients and prospective clients in general, bar one regarding pension contributions noted later in the blog.
The various changes in tax that were announced were, as is often the case, simply confirmation of announcements previously made. This is even the case with tax avoidance measures, for example the move to restrict the tax benefits of salary sacrifice schemes (and the fact that this restriction will not apply to salary sacrifice for pension contributions).
Those of our clients who focus on property investment may find the screw has been turned further on the profitability of their business. Initiatives over the past year or so have made residential property investment less profitable. Now it is intended that letting agencies will no longer be allowed to charge fees to tenants; landlords may find they will have to pay higher fees to those agencies.
Over the weekend there was a lot of press talk about the proposed curb on cold calls to promote pension reviews. Those who believe what they read in the papers were expecting an announcement of measures to ban this kind of cold calling, perhaps even extended to cold calling relating to any kind of investment. In the event, what we got was an announced "consultation on options to tackle pension scams".
We should all welcome such a consultation. Most of us have probably come across clients who have encountered pension scammers. If we and the government can, between us, find a way to make it more difficult for these scammers to operate, then this will be a good thing. When the consultation begins, we should be ready to join in and express our views.
We wish to encourage prospective clients to review their pension investments, make sure their asset allocation is appropriate to their attitude to risk and capacity for loss, and make sure the charges they are paying are not unnecessarily high.
If the pension investors who have been conned by scammers into making inappropriate investments had met with and retained a good financial adviser, such as ourselves, it is most unlikely they would have been hoodwinked in this way. It is incumbent on us as professional advisers to get in front of as many people as we can and try to ensure they are properly looked after and do not fall into the hands of the scammers.
That one surprise...
The government will cut the Money Purchase Annual Allowance from £10,000 to £4,000 for those who have used the pension freedoms. Put simply, as soon as someone draws a pound of taxable cash using the pension freedoms, the amount they can save in a Money Purchase pension would be slashed from £40,000 to £4,000. – Take advice before you make any decisions about drawing an income.
OBR growth forecast upgraded to 2.1% in 2016 - from 2.0% - then downgraded to 1.4% in 2017, from 2.2%
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 by the end of the Parliament
Tax savings on salary sacrifice and benefits in kind to be stopped, with exceptions for ultra-low emission cars, pensions, childcare and cycling