On Wednesday 25 November the Chancellor George Osborne presented the first Autumn Statement of this Parliament along with the Spending Review. Covering a number of key areas, including the NHS, schools, housing, transport, the statement also touched upon a number of important areas from a financial planning perspective.
Here are three points to consider from the Chancellor’s announcements.
Buy to let and Second Home Stamp Duty.
One of the headline announcements in Mr Osborne’s statement was the introduction of higher rates of Stamp Duty Land Tax on buy to let and second home purchases.
As a clear move to dampen the booming buy to let market; a gesture towards encouraging people to step onto the property ladder for the first time, the levy has been met with understandable dismay by property investors.
Those relying on buy to let properties as a means of securing their financial future or as their retirement fund may need to consider alternative routes for their investments. Alongside the existing potential liquidity risks, there will also be higher overall costs to consider.
Increase in State Pension / Flat Rate Pension.
In a widely welcomed, although somewhat overdue move, the Chancellor announced an increase to the state pension. This will rise to £119.30 per week from April 2016 for those reaching state pension age before 6th April 2016, the largest increase seen for 15 years – representing a 2.90% increase based on full basic state pension (in line with national average earnings).
Taxation.
The Chancellor confirmed that the current ISA limit of £15,240 will remain the same for the forthcoming financial year. The Junior ISA and Child Trust Fund limits will also remain the same – at £4,080. Limits usually increase in line with CPI, measured in September. As it reduced this year, there will be no increase.
Tax avoidance was a key theme in the statement, with no fewer than 16 measures mentioned during the statement. Using an additional £5 billion, there will be a fresh clampdown on disguised remuneration schemes, stamp duty avoidance, and the abuse of intangible fixed-assets regime and capital allowances. Businesses and individuals would be well advised to take a closer look at some of the measures announced with their accountants.
From April 2009, CGT payments due from the sale of residential property will be payable within 30 days of completion rather than being due in the January following the end of the tax year of disposal which could be 21 months in some cases. The change will affect taxpayers who make a capital gain on the disposal of buy-to-let residential property or second homes.
With this autumn statement and particularly in his summer budget, the Chancellor has made a number of key announcements this year that have the potential to greatly impact upon financial planning, particularly for high earners, or those with inheritance tax concerns. For example, the new Annual Allowance tapering rules, which have now passed into law.
The key message is to act sooner rather than later to take advantage of the window of opportunity prior to these measures coming in. For further advice from one of our Chartered Financial Planners, please don’t hesitate to contact us.
Please note: The Financial Conduct Authority does not regulate tax advice.