What to expect from the Autumn Statement
For the first time, Chancellor George Osborne has some good news to deliver in the Autumn Statement on 5 December, though the Government is looking into a number of tax changes that could hit savers.
The Bank of England has upgraded growth forecasts from 1.5% this year to 1.8% and from 2.5% to 2.8% in 2014. Away from the growth figures, however, there are a number of tax changes the Government could make in December which could hit investors.
ISA reforms The Government kicked a hornet’s nest over the summer when it mooted capping the ISA allowance at £100,000. The Treasury was quick to reject the suggestion, but the idea was clearly up for discussion. Former Treasury financial secretary Mark Hoban was seen as a barrier to ISA reforms but his successor Sajid Javid is said to be more open to change.
Meanwhile, the Building Societies Association wants the ISA cash allowance doubled to £11,520 and for the Government to pay up to 50p in the pound for first-time ISA users. It also wants the Government to allow transfers from child trust funds to junior ISAs.
Capital gains tax Mr Osborne has suggested charging non-residents capital gains tax for the first time, in a bid to cool London property prices fuelled by foreign investment. The Government introduced a 7% stamp duty on homes worth more than £2 million last year, though this did little to dampen prices.
Personal allowance Deputy Prime Minister Nick Clegg wants the allowance to rise to £10,500 in the next Budget. The Liberal Democrats also want it to increase to £12,500 in the next parliament and the Conservatives are considering adopting the promise.
Pensions tax relief Last year’s Autumn Statement set out plans to cut the lifetime allowance from £1.5 million to £1.25 million and the annual allowance from £50,000 to £40,000 from next April.
The Treasury opened a debate to tax relief changes this summer and the influential Pensions Policy Institute has laid out options for reform. Behind the scenes, the Government has toyed with cutting the amount that can be taken as pension tax-free cash from 25% to 20%.
IHT and pilot trusts HMRC launched a consultation in May on changing the rules that apply to multiple pilot trusts. HMRC wants the £325,000 nil-rate allowance for each split trust, which is granted before a 10-yearly, 6% tax charge is levied, to apply to all trusts set up by the individual. The Autumn Statement may see further movement on this policy and further clarity about whether these rules will be brought in retrospectively.