Many clients will have already seen our Autumn Statement Summary, which analyses in detail the main points from The Chancellor’s Autumn Statement, made on 3rd December. Like many major government announcements though, the real headlines and many of the outcomes from the statement only became clear in the weeks after George Osborne stood in parliament, as the government, opposition and the media searched through the full document to push the agendas that most interested them.
Certainly a main point to emerge has been the fact that the Chancellor sees a progression of his government’s spending cuts continuing well into 2015, eventually escalating to a position he himself characterised as ‘severe’. For both the public and private sectors, this presents a potential worry, especially seeing as the Chancellor is not yet specifying areas that will either be protected, or explicitly cut, as well as the fact that he is still a Chancellor with a huge deficit to reduce. Depending on what exactly happens here, and at the General Election in May 2015, this might be an Autumn Statement characterised by what wasn’t announced, rather than what was.
The main headline news on the day was undoubtedly the change to Stamp Duty, which saw the system reformed to come into line with taxation methods such as Income Tax. In the post-Statement analysis, it became clear that many saw this reform as the Conservative’s answer to Labour’s already announced Mansion Tax and, although the incumbent party’s reforms are less severe than Labour’s taxation, those with larger properties do still lose out and may well be looking at both systems with a level of disdain.
The statement was also characterised as having precious little to offer on pensions, especially considering the wide-scale changes made during March 2014’s Budget. Annuities were brought into line with the changes on pensions but other than that, there were only fairly minor new announcements.
To spot the likely changes in this area before the General Election, some observers have suggested looking at the whole spread of recent governmental changes, though necessarily there is a level of uncertain assumption involved with doing so. Pensions have been changed to give pensioners more freedom and annuities are now in line with that. The so-called pension ‘death tax’ has been abolished and, during the Autumn Statement, Mr Osborne also reformed how ISAs were transferred on death. This has led to some suggestions that there might be a reform of Inheritance Tax on the agenda, with so many related areas having changed and a Conservative government that traditionally aggressively pursues the 65+ voters at election time.
The other major tax takeaway from the statement was potentially a fairly big one, if only because it involved Income Tax. The Chancellor again stated his long-held aim to get the income tax personal allowance up to £12,500 (it now stands at £10,600) and to increase the higher rate allowance to £50,000 (it now stands at £42,385). It is probably unlikely that either will see substantial rises before the next election, though they may get an increase in The Budget, so to achieve his aim Mr Osborne will need the Conservatives to stay in power. Whether the promise of those rises in allowance and higher rate limit will be enough to tempt the voters the party needs, we will have to wait and see come May 2015. Before then, there is one more Budget announcement for Mr Osborne to reveal major economic policies, an announcement we and many others will certainly be watching closely.Posted In : Announcements, Pensions, ISA, UK, Tax, Inheritance Tax