Following the Autumn Budget yesterday, although there were some headline grabbing announcements in respect of extra money for the NHS, there were very few changes announced that affect personal finance.
We have detailed the changes that may affect our clients’ personal finance affairs below:
We are pleased to hear that the personal allowance tax threshold will be raised a year earlier than expected. From 6 April 2019, the personal allowance will increase from £11,850 to £12,500 and the higher-rate tax threshold will increase from £46,350 to £50,000. This represents an excellent tax planning opportunity, particularly for individuals receiving drawdown income from their pensions.
There was good news for clients in receipt of dividend income. Despite speculation that the tax take on dividends might be increased, there was no change on this front and the dividend tax allowance will remain at £2,000. There was also no change in respect of legislation covering EIS and VCT, again, good news for clients wishing to invest in smaller companies and undertaking tax planning.
Despite the rumours and speculation ahead of the Budget regarding pensions, it was actually a very quiet Budget on this front. However, as planned, the Lifetime Allowance for pensions will increase in line with the Consumer Price Index (CPI) for 2019/20, rising to £1.055m.
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 from £4,260 to £4,368. The Government will publish a consultation in 2019 on draft regulations for maturing Child Trust Fund Accounts.
The Office for Budget Responsibility has raised its economic growth forecast for 2019 to 1.6% which represents an increase of 0.3% from the forecast made in the Chancellor’s spring statement. Whether this plays out in practice or not will depend on the shape of Brexit.
Please note, this article is for information only and does not constitute investment or tax advice. Past performance is not necessarily an indication of future returns; the value of investments and any income from them is not guaranteed and can fall as well as rise; pension rules and tax legislation are subject to change. If you would like investment or pension advice on your individual circumstances, please do get in touch on 01392 875500 or firstname.lastname@example.org.