Autumn statement, new Parliament and beyond …
Jeremy Hunt's second Autumn Statement could almost have been mistaken for a Budget speech but, after rumours of inheritance tax cuts and reductions to income tax thresholds or rates, it was remarkably light on personal tax matters. Much of the statement emphasised measures designed to incentivise business growth.
There were no substantive changes to income tax and no mention at all of inheritance tax or capital gains tax. The notable exception was the announcement of cuts to national insurance contributions, although they are a little less generous and substantive than first appeared.
Other items include:
- Pensions: measures to take effect from 6 April 2024 include the removal of the lifetime allowance (as previously announced, though possibly to be reintroduced by a new government); clarifying the taxation of lump sums and lump sum death benefits; the application of protections and the tax treatment for overseas pensions; transitional arrangements, and reporting requirements. For the longer term, there was package of announcements aimed at improving the pensions market by providing better outcomes for savers, driving a more consolidated pensions market and enabling pension funds to invest in a diverse portfolio, including exploring a move towards a lifetime pension provider model to allow individuals to have one pension pot for life.
- ISAs: although existing ISA limits remain unchanged there will be some changes to the qualification criteria/mechanics of the schemes from 6 April 2024 for example allowing multiple subscriptions each year to ISAs of the same type, removing the requirement to make a fresh ISA application where an existing ISA account has received no subscription in the previous tax year, allowing partial transfers of current year ISA subscriptions between providers and widening the investments permitted in Innovative Finance ISAs to include long-term asset funds and open-ended property funds with extended notice periods.
The absence of any mention at all of capital taxes may mean that there are still some announcements being held back until the next Budget, which perhaps could include some sweeping inheritance tax reforms, in the run up to the general election if there is sufficient “fiscal headroom”. The timing of the election and manifesto pledges remain to be seen but Labour recently confirmed that they have no intention of making changes to agricultural property relief, which will be reassuring for some. Nevertheless, uncertainty over possible changes make confident estate planning rather challenging in the current environment, but continuing to make use of existing exemptions and reliefs would seem sensible.
Aside from tax, last month’s King’s Speech confirmed the legislative agenda for the current Parliament will include significant leasehold and enfranchisement reform. For further details of this and other issues currently shaping the property market, please see our recent Property Insights here.