The Chancellor's Autumn Statement focused, in their words,  on "protecting economic and national security".  

One of the most talked about highlights was the rebuttal by the House of Lords of the tax credit reforms which in effect forced the Chancellor to hold back his plans in this area.  Commentators believe that the proposed tax credit cuts will somehow be clawed back with the implementation of universal credit.  Whilst the income threshold for tax credit taper remains unchanged at  £6,420 , one wonders how this taper will be effected with the  new digital proposals for collection of taxes , designed to  bring tax receipts forward but could also trigger the implementation of the taper before a complete trading/ reporting  year.

There were no details from the pension tax relief consultation so we suspect a late night on Budget Day in 2016.

There were of course many other highlights  for financial planning and wealth management.   A full copy of the HM Treasury Spending Review and  Autumn statement is available to download at the bottom of this article.

But for now...

Income Tax   

• No changes to personal tax allowances.   
• The band of savings income that is subject to the 0% starting rate will remain the same for 2016/17

Capital Gains Tax 

• No announcement on rates but expect it to be £11,100 if increased in line with CPI 
• CGT on residential property is currently falls due from 10 -22 months after a disposal which is out of step for other taxpayers, such as those paying income tax through P.A.Y.E.   From April 2019 capital gains will fall be payable within 30 days of completion of any disposal of a residential property.

NISAs

• Annual subscription limits - ISA subscription limits won’t be changed in 2016-17. The ISA limit will be kept at £15,240. The Junior ISA and Child Trust Fund limits will be kept at £4,080.
• ISAs: qualifying investments - The list of qualifying investments for the new Innovative Finance ISA will be extended in Autumn 2016 to include debt securities offered via crowd-funding platforms.
• ISAs: tax advantages during the administration of an estate - As part of the Additional Permitted Subscription rules, the Government has announced that it will allow the ISA savings of a deceased person to continue to benefit from tax advantages during the administration of their estate.  This will be introduced in 2016 after consulting with the industry.

Pensions

• Pension Tax Relief - As expected, there were no surprise announcements on pension tax relief, with the Government reconfirming that it will respond to the Pension tax relief consultation at the Budget 2016.
• Automatic Enrolment - The minimum contributions needed for a scheme to meet the minimum requirements under automatic enrolment have been delayed. Minimum contributions were to have risen from 2% of qualifying earnings to 5% from October 2017, and 8% from October 2018. But now the rise to 5% will occur from April 2018 and 8% from April 2019. The Government are doing this to reduce some of the complexity that smaller employers would have faced.
• Inheritance tax on undrawn pension funds in drawdown - Currently, IHT may arise where the member transfers between registered pension schemes where the member knew their life expectancy was impaired and subsequently dies within the following two years. The Government confirms that inheritance tax will not arise when a pension scheme member designates funds for drawdown but does not draw all of the funds before death. Further details will appear in the Finance Bill 2016.
• Secondary market for annuities - This December the Government will provide further detail on the creation of a secondary market for annuities, including the consumer protection package.
• State Pension - The basic State Pension will once again be increased by the triple lock to £119.30 a week from April 2016. The new single tier pension introduced from April 2016 will be set at a maximum of £155.65 a week.

Buy to Let 

In addition to the changes in the taxation of  the rental income from buy to let properties, anyone wishing to purchase a residential property for investment or a second home will need to pay additional stamp duty at 3% above the current Stamp Duty Land Tax rates.  This comes into effect on 1st April 2016.

The higher rates will not apply to companies or funds making significant investments in residential property.   The government will issue a consultation on the policy detail.  


Inheritance Tax 

• Residence nil rate band -  Nothing new announced today on this which comes into force from 6 April 2017.  However, it is important to note that the Finance (No.2) Act 2015 received Royal Assent on 18 November 2015 so the final details of this are now available. Part 2 of the Act introduces new sections 8D to 8M into the Inheritance Tax Act 1984.
• Disclosure of tax avoidance schemes - In the Summer of 2015 HMRC produced a consultative document proposing certain changes to the Disclosure of Tax Avoidance Scheme regulations. One of the areas of proposed change concerned inheritance tax schemes. Representations were invited before the end of September. However, no announcement has been made following the close of the consultation period.

• Deeds of Variation -  Following a consultation document earlier this year, the Government have confirmed that they won’t be making any changes to rules around Deeds of Variation.
  
  

Tax Avoidance Evasion and Compliance 

The government will introduce a new penalty of 60% of the tax due to be charged in all cases successfully tackled by the General Anti Abuse Rule (GAAR) and will make small changes to the GAAR’s procedure to improve its ability to tackle marketed avoidance schemes.

• A reduction in the opportunities for income to be converted to capital in order to gain a tax advantage.  The government will shortly publish a consultation on the company distributions rules, and will amend the Transactions in Securities rules and introduce a Targeted Anti-Avoidance Rule.
• Tax planning around the intangible fixed assets regime, can be used to obtain more generous corporation tax relief than is intended by the legislation. The government are aware of this and  will therefore amend the regime to stop arrangements that use partnerships to obtain relief that was not intended.
• A new criminal offence for tax evasion will be introduced which removes the need to prove intent for the most serious cases of failing to declare offshore income and gains.   
• Civil penalties for deliberate offshore tax evaders will be increased.  A new penalty linked to the value of the asset on which tax was evaded will be introduced as well as penalties for those who enable offshore tax evasion.

Tax administration - Making tax digital 
​
The government will invest £1.3 billion to transform HMRC into one of the most digitally advanced tax administrations in the world. Most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account, reducing errors through record keeping. HMRC will ensure the availability of free apps and software that link securely to HMRC systems and provide support to those who need help using digital technology.

This will not apply to individuals in employment, or pensioners, unless they have secondary incomes of more than £10,000 per year. The government will publish its plans to transform the tax system shortly and will consult on the details in 2016.

This will also bring the receipts of tax forward but one wonders how this will impact the self employed in receipt of tax credits.  Will it bring the level of income for tax credit taper, currently £6,240,  forward meaning that self employed people could loose their tax credit mid accountancy period. 


And finally .....  more details are expected soon on a number of measures that were announced by the Chancellor in the July Summer Budget, but which were not mentioned in this Spending Review.

• Dividend Tax Credit will be abolished and replaced by a new Dividend Tax Allowance of £5,000.
• The ability for savers to withdraw and replace money from a cash or stocks-and-shares ISA without it counting towards the annual ISA subscription.
• Changes to the domicile rules. The Government has consulted on this but we are still awaiting the final legislation to confirm the changes.

If you would like a review of your personal circumstances and weather you are investing in a tax efficient way  (  and I emphasise  tax efficient  not tax avoidance ) ensuring you are utilising your reliefs, your investments are performing as expected and your financial plans underpinned with adequate protection - please do not hesitate to get in touch.  You can use all the contact methods at the top of the web page or just complete and enquiry form below.

 And don't forget your free downloads

As we approach the fireworks season here, I've been reflecting on some fond memories of times spent in Malta and in particular at the village festivals.  These events would be dominated by rival marching bands, who would start their journeys at opposite ends of the village.  Their eventual  union in the village square would trigger mayhem, celebrations and of course fireworks.  Except the fireworks were a real disappointment, one huge seismic upfront bang with a trail of smoke and then nothing .... finished.  

That was a good couple of decades ago.   Valetta, the capital of Malta, now hosts a two day International Firework Festival every April.  The the rivalry is amongst local firework producers with the aim to create a memorable, noisy but importantly adding colour and sparkle to the experience.


So what's all this got to do with financial planning.....


Here are five ways in which the life insurance companies have used rivalry to evolve and give you more bang for your buck.
​

1.    Full corporation tax relief.  Jerry Bayman former head of Business Protection at Bright Grey are credited with developing "relevant life policies".  By exploiting legislation  from the 2003 Income Tax Earnings and Pension Act, small limited companies can now provide life assurance to directors and key employees by way of death in service benefits, with full corporation tax relief, no interference with the pensions lifetime allowance and without inclusion as a P11D benefit in kind.

2.  Free weekly cinema tickets, coffee and iTunes.  Vitality Life,  the rebranded collaboration of PruProtect and Discovery Life  in South Africa, rewards its policy holders who engage in their health.  Discounts on bikes, discounted health checks, free weekly cinema tickets, coffee and iTunes are some of the rewards available in return for exercising and getting regular health checks.  Full use of the rewards may be greater than the actual premiums you pay.

3.  Children's cover   I can't be sure, but I believe BUPA were the first company to offer children's critical illness cover as an additional definition, warranting a payment under a critical illness policy.  Payment is a percentage of the overall cover, is paid as an extra which leaves the policy owners cover intact. BUPA subsequently merged with AXA Life who then merged with Friends Life.  We've recently had a successful payment for a client, who's daughter is now recovering from hydrocephalus.

4.   24/7  Health Support Line  In conjunction with my network we are very proud to offer this service from Red Arc for free, at the point a client needs it and for as long as they need it.  Losing someone you love, being diagnosed with a critical illness or suffering an injury that prevents you from working can be made easier to bear when there is expert advice and a listening ear.  As well as taking care of financial aspects we want our clients other worries looked after.  The service is run by Red Arc for all clients,  independently from the insurance companies.

5.  Rehabilitation Cover  It was possibly Friends Life who first offered this as an integral part of their income protection cover.   Its not often published but it makes sense really for an insurance company to do everything they can to help get someone back into work after an illness or injury.  It reduces their claims payment but importantly lets clients get back to work and enjoy life.  


The price rivalry with life assurance, critical illness and income protection is over and all companies now publish their claims statistics online.  

What counts now are the "add ons"  to the policies.   I haven't mentioned them all and I haven't even mentioned the importance of trust documents ( that can be saved for a later post ) but this is where an adviser with enthusiasm and knowledge of the different policies out there, can really make a difference.  

An adviser will  listen to your needs and goals and help you navigate the various company propositions and importantly will be around to help any clients through a claims process.
​
Its not about price anymore,  it's about quality of experience and securing our clients financial future in the best way possible. So
So,  if you've got a policy in a drawer,  a carrier bag or shoe box in the cupboard and you are not sure if it is a banger or a damp squib please don't hesitate to get in touch and take advantage of a review "on us".  

Enjoy your fireworks
​Jill