Budget: Comment

Hammond defies experts with light touch statement

Well, another budget slips by and this one came with plenty of rumours, expectation and so called “expert” predictions.

The Chancellor was under pressure with his first Autumn budget to give plenty of time for new rules, allowances and changes to be implemented by the next tax year. The result, though, was he leaves most things untouched with little impact for the investor/saver. 

Trying to please everyone is never easy and prior to the budget there was pressure to ditch business rate rises lobbied by the British Chamber of Commerce. Teachers looking for wage rises following a pay cap in the past seven years and property sales falling due to high stamp duty costs all meant radical changes were sure to happen and Mr Hammond would have to find the money from somewhere to balance the books. 

The easy target over the past few years has been pensions as most people don’t understand them because of the complications of pensions “simplification” introduced by Gordon Brown in 2006. Rumours were that higher rate tax relief on pension contributions would go and perhaps even the valuable tax free cash available to those over age 55 would be restricted. 

The good news was that this was left untouched and higher rate tax payers can still get an effective 67% uplift on pension contributions – make hay while the sun shines. 

So what were the changes? Well, a slight increase to the pension lifetime allowance from £1m to £1.03m in line with CPI. This is the maximum amount of fund that can be crystallised without any additional tax charge. This is worth an extra £16,500 to those without any lifetime allowance protection. 

The main ISA allowance was left untouched with a generous £20,000 available and sheltering £40,000 from tax per couple every year is not be sniffed at! For those looking to build pots for children for perhaps further education the junior ISA allowance was increased to £4,260 per child. 

Aside from investments and pensions, the biggest changes were an increase to the personal allowance and higher rate tax threshold along with the removal of stamp duty on the first £300,000 for first time buyers.

Those giveaways are not applicable to us Scots as we have different rates and will have to wait until 14December to see what’s in the Scottish Budget.

With young people already struggling to get on the housing ladder let’s hope the same generosity prevails.

 Steve Wilson is a director at Alan Steel Asset Management

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