This afternoon saw the Autumn Budget, with the Chancellor standing to reveal his financial plans for the second time this year.
Despite being the first of its kind, this Budget was a fairly quiet one in terms of personal financial planning. I see this as a positive thing, as it offers a stable environment in which it is possible to look ahead and put financial plans in place for the future. An example of this is that the increase in the Lifetime Allowance for pension contributions is going ahead as planned, increasing from £1 million to £1,030,000 from 6 April 2018.
The personal allowance is currently £11,500, with the threshold for higher rate tax starting at £45,000. Today’s Budget will see those figures increase to £11,850 and £46,350 respectively. Tax-free allowances such as this can be a vital factor in efficient financial planning, so speak to your financial planner to make sure you’re taking advantage of your, or your partner’s, tax-free allowances.
As the Scottish government now has powers over taxation north of the border, these changes don’t apply in Scotland. However the Scottish Draft Budget 2018/19 will be published on 14 December, so we’ll be keeping a close eye out for any changes there.
Housing took up a big part of the Chancellor’s speech today, particularly his plans for new homes in the future. One announcement to draw your attention to was the introduction of a potential council tax premium on empty properties. Your financial planner will be able to work with you to ensure you avoid any unexpected charges on properties you either inherit, or that you might hold as an investment.
Alongside his promise to build 300,000 new homes in the UK, the Chancellor made perhaps the most revolutionary of his announcements when he abolished stamp duty completely for first time buyers on homes worth up to £300,000. Properties costing up to £500,000 will also have no stamp duty charged on the first £300,000.
This was included as part of a wider effort to make it easier for first-time buyers to make it on to the property ladder. Today’s announcement will certainly be welcomed by some at a time when it isn’t particularly easy to save for a first home. It’s a topic we’ve previously looked at in more depth, so if you’re thinking about your own children here, have a read of our tips for helping Generation Rent.
Enterprise Investment Schemes
Although niche, one of the bigger announcements affecting financial planning was in relation to changes to Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCT) that will come into force on 6th April 2018.
EIS were launched in 1994 to encourage investments in certain businesses by offering tax incentives. Today the Chancellor had a clear focus on tech start-ups and said that the EIS investment limit will double in April for ‘knowledge investment’ firms from £1m to £2m.
However, the Chancellor was very clear in his announcement that EIS ‘will not be a shelter for low risk capital preservation schemes’. Commentary post Budget also revealed that the government will further target VCTs towards investment in higher risk areas of the market.
These sorts of investment usually carry more risk and this is a very complex area of financial planning. We’ll be looking at this in more depth as more information becomes available but, as always, please do approach your financial planner about any questions you may have as they will be well versed in the potential risks and benefits of different methods of investing. They are also well placed to discuss the different investment options available and the best, most tax efficient ways to save for your future.
The information in this blog or any response to comments should not be regarded as financial advice. Laws and tax rules may change in the future. The information here is based on our understanding in November 2017. Personal circumstances also have an impact on tax treatment.
There may be a charge for financial advice.