Yesterday Philip Hammond presented his third Budget and his last before we find out what’s in store with the final deal on Brexit. The Chancellor left the door open for a Spring Budget in case the Brexit outcome is a ‘no deal’.
Thankfully the Chancellor didn’t make any major changes to the workings of the pensions, savings and personal tax systems, but looking more closely at the Budget supporting documentation does reveal some tinkering.
Below we’ve listed some of the key items that might be of interest to you.
But… if it all looks too boring for you watch Gladstone the Cat’s summary instead! https://twitter.com/hmtreasury/status/1056951817827950593
Income tax
Personal allowance
The Income Tax personal allowance will be increased to £12,500 on 6 April 2019 for the 2019-2020 tax year. That’s a year earlier than originally planned. The allowance will remain the same for 2020/21 and then increase in line with Consumer Price Index (CPI) changes.
For higher rate taxpayers, the threshold above which higher earners start paying 40% tax is being increased to £50,000 in 2019-20, again a year earlier than planned. The threshold will remain the same for 2020/21.
Individual Savings Account
The ISA annual subscription limit for 2019/20 will remain unchanged at £20,000. The annual subscription limit for Junior ISAs and Child Trust Funds for 2019/20 will be increased in line with CPI to £4,368.
Stamp Duty Land Tax
First time buyers
Stamp Duty Land Tax (SDLT) first-time buyers relief will be extended in England and Northern Ireland to apply to all first-time buyers purchasing residential property worth up to £500,000 through a qualifying shared ownership scheme. The relief will also apply to shared ownership property buyers who have already paid SDLT on the initial equity stake and rental amount since the introduction of the relief on 22 November 2017.
They will have a year to make a backdated claim for the relief. This measure will be effective from 29 October 2018.
Remember: Land Transaction Tax (LTT) has replaced UK Stamp Duty Land Tax (SDLT) in Wales.
Capital Gains Tax
Private Residence Relief: Lettings relief
Currently, the relief can be claimed by individuals who let out a property that is, or has in the past been, their main residence. From April 2020, the government will reform lettings relief so that it is only available to individuals in shared occupancy with a tenant.
Private Residence Relief: Final period exemption
Currently, the exemption means that people do not have to pay CGT on gains made in the final 18 months of ownership. From April 2020, the exemption will be reduced to 9 months. There will be no changes to the 36 months final period exemption available to disabled people or those in a care home.
Entrepreneurs’ Relief
To claim Entrepreneurs’ Relief the minimum period over which the relevant qualifying conditions must be met is being extended from 12 months to 24 months for disposals from 6 April 2019. It is expected that 95% of claimants will be unaffected by this change.
Inheritance Tax
The Nil Rate Band will remain frozen until 2021/2022. The Residence Nil Rate Band will rise to £150,000 from April 2019.
Pension changes
Standard lifetime allowance
The standard lifetime allowance for pensions will increase in line with the rise in the consumer prices index (CPI) for 2019/20 to £1,055,000.
Banning pensions cold calling and other scams
As soon as possible, the government will ban pensions cold calling or unsolicited direct marketing calls in relation to pensions products/services. They will prohibit cold calling in relation to pensions unless the caller is authorised by the Financial Conduct Authority (FCA), or a trustee/manager of an occupational or personal pension scheme.
The ban covers direct marketing in relation to pensions and is not limited to calls in relation to pension transfers.
Use of email and text messaging for direct marketing purposes is already restricted.
The ban will be enforced by the Information Commissioner’s Office (ICO) and they will publish industry guidance later this year.
An awareness campaign will be launched by the government shortly before the ban is implemented. The message will be that all pensions cold calling is illegal, and that people should put the phone down if they believe they are receiving a cold call.
The Government is committed to introducing legislation to limit the statutory right to a pension transfer. This is a measure aimed at preventing pension savings from being transferred to fraudulent pension schemes, and to help protect members at the crucial point where a scammer has persuaded them to transfer. The Government may seek views on draft regulations for this measure.
Pension Dashboards
The Government is supporting the launch of Pension Dashboards; innovative tools that will allow an individual to see their pension pots, including their State Pension, in one place.
The Department for Work and Pensions (DWP) will consult later this year on the detailed design for industry-led Pension Dashboards.
The Budget announced extra one-off funding of £5m in 2019/20.
Boosting pensions for the self-employed
This winter, following the 2017 review of automatic enrolment, the DWP will publish a paper setting out the Government’s approach to increasing pension participation and savings persistency among the self-employed. It will focus on expanding evidence through a programme of targeted interventions and partnerships.
If you have any questions at all, call us for a friendly chat.