Despite some of the predictions raised in my last post (Pensions – Still a good option?) there was little in this year’s Budget to affect our clients financial planning strategies. The Chancellor was perhaps looking to reinforce the message of “austerity is coming to an end” with a Budget give away.
The key points from a financial planning perspective from yesterday’s Budget, as well as from those previously announced, are as follows:
- The personal allowance and higher rate threshold will increase earlier than expected to £12,500 and £50,000 respectively from April 2019. The income tax rates and bands for Scottish taxpayers will be announced in Scottish Budget on 12 December.
- There are no other changes to income tax bands or allowances.
- The pension lifetime allowance (LTA) will rise to £1,055,000 from April 2019.
- Reassuringly, there are no changes to pension annual allowances (AA). The standard AA remains at £40,000, the money purchase AA stays at £4,000 (with no carry forward) and there are no changes to the high income AA taper rules. – This is especially good news for those clients in the NHS Pension.
Capital Gains Tax
- The capital gains tax allowance will increase by £300 to £12,000 from April 2019.
- As expected, the IHT nil rate band will remain frozen at £325,000 until April 2021.
- The residence nil rate band will increase from £125,000 to £150,000 from April 2019, allowing some couples to leave up to £950,000 to future generations free of IHT.
- There will be a consultation to consider the simplification and fairness of trust taxation.
- The existing IHT regime for trusts is notoriously complex and any attempt to simplify it is extremely welcome. Removing the complexity of trust tax charges would allow advisers to concentrate on the benefits a trust can offer their clients to control their affairs, rather than them being fearful of charges that may emerge in future.
- Annual ISA limits stay at £20,000 per person, with no reduction in the range of ISA options available to meet different needs.
As usual if there are any aspects of this year’s Budget which you feel may affect you personally we will be happy to discuss these with you.