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Autumn Budget 2017

22 November 2017

The chancellor has delivered his first Autumn Budget. This focussed heavily on the wider economic position for the country, with a number of positive initiatives targeted at the housing market. There were no significant changes that affect mainstream investments or pensions.

View our electronic Autumn Budget Report, which provides further information on the changes, key facts and figures, and useful financial planning tips. Please note, if viewing the electronic report via a desktop computer, you will need to have Adobe Flash Player installed. 

Taxation

From April 2018, the personal allowance will increase to £11,850, with the basic rate tax band of £34,500; higher rate tax threshold will be £46,350.

The starting rate tax band remains at £5,000 for savings income. The rates of income tax remain unchanged.

The government intends to publish a consultation in 2018 on how to make the taxation of trusts simpler, fairer, and more transparent.

The government will also consult on the tightening of IR35 provisions for contractors and may extend what they have done in the public sector to the private sector.

Corporation tax – indexation allowance for capital gains for corporates will be frozen from 1 January 2018, although indexation relief will continue to apply for disposals after 22 November until 31 December 2017. We are currently working through the implications of this and will provide an update in due course.

Capital Gains Tax – the Capital Gains Tax annual exemption will increase to £11,700, and the annual exemption generally available to trustees will increase to £5,850 from April 2018.

Inheritance Tax – the government has commissioned, and received, research to understand the motivations, behaviours and attitudes underlying decisions made by individuals on Inheritance Tax matters and the use of reliefs and exemptions in that process.

Pensions

Despite significant speculation that there would be changes that might adversely affect pensions, there has been no change made to tax relief on pension contributions or the Annual Allowance. The increase in the Lifetime Allowance in April 2018 to £1,030,000 (in line with September’s Consumer Prices Index (CPI) rate) has been confirmed.

The rates for full single tier state pension has been confirmed as £164.35 (£4.80 increase). The basic state pension will increase by 3% to £125.97.

ISAs

The ISA annual subscription limit for 2018-19 will remain unchanged at £20,000. The annual subscription limit for Junior ISAs and Child Trust Funds for 2018-19 will be increase in line with CPI to £4,260.

Enterprise Investment Schemes (EIS), Seed Enterprise Investment Schemes (SEIS) and Venture Capital Trusts (VCT)

New measures are to be introduced to the EIS, SEIS and VCT rules to exclude substantially tax-motivated investments, where the tax relief provides most of the return for an investor with limited risk to the original investment. The condition depends on taking a ‘reasonable’ view as to whether an investment has been structured to provide a minimal risk return for investors.

In addition, the chancellor also announced the annual limit for individuals investing in knowledge-intensive companies under the EIS will be increased to £2 million, provided that anything above £1 million is invested in knowledge-intensive companies.

Technical details on this will follow over the coming weeks and we will provide you with further information when more details are announced.

Please note that these investments are suitable only for experienced, sophisticated or high net worth investors who accept that they may get back significantly less than the original investment.

These represent a much higher risk than investing in larger well established listed companies listed on the FTSE All Share Index and are inherently more illiquid.

Stamp duty

The government announced that it will exempt first-time buyers from Stamp Duty Land Tax on properties up to £300,000; this exemption is also available for the first £300,000 on properties up to £500,000. This is effective from today (22 November).

 

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are dependent on individual circumstances.

Some of the products and investment structures documented within this article will not be available to our clients in Asia. For information on the funds that are available please get in touch.

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