Autumn Statement and Spending Review 2015 – key points

Unveiling the first spending review under a pure Tory government since the mid-1990s, the Chancellor revealed a rise in the stamp duty payable on buy-to-let properties, increased support for social impact bonds and confirmed the level of the new state pension.

Facebooktwittergoogle_pluslinkedinmailFacebooktwittergoogle_pluslinkedinmail   by Jeannie Boyle, 25th November 2015

Buy-to-let blow: stamp duty rise

  • Buy-to-let landlords and people buying second homes will have to pay higher rates of stamp duty.
  • From April 2016, a 3% surcharge on the property purchase value will apply for residential properties worth £40,000 or more.
  • This may deter people who might have been thinking of investing in property when their pension allowances are slashed next April.

Increased support for social impact bonds

  • Commitments to reduce spending on welfare will leave a gap in provision. Impact investing is one way in which this gap can be filled and it was no surprise to see an increase in support for Social Impact Bonds (£105 million over the rest of this Parliament).
  • We welcome the Chancellor’s commitment and look forward to details of how this will be allocated. The UK is a world leader in this field and we believe it can help greatly to improve the success of relationships between the public and third sectors.

Rise in basic state pension

  • The ‘triple lock’ guarantee means the Basic State Pension increases by 2.9% to £119.30, the biggest real terms increase for 15 years.
  • The Chancellor also announced the new flat rate pension will start at £155.65 in April 2016 (dependent on qualifying years). Anyone expecting to receive the new flat rate pension should request a forecast from the Department for Work & Pensions.

Pension tax reform – take advantage while you can

  • There was no mention of pension tax relief changes – the government’s response to the recent consultation is not expected until the budget next March.
  • We fully expect changes to the current system of relief at this time and urge you to consider making a pension contribution before then.

Auto-enrolment – Osborne delays contribution rise

  • Two planned rises in minimum contribution rates under auto-enrolment have been delayed and aligned with the tax year going forward.
  • In October 2017 minimum contributions were to have risen from 2% to 5%. This increase will now take place in April 2018.
  • The second increase, from 5% to 8%, was due to take place in October 2018. This is delayed until April 2019.

ISAs – further shake-up

  • Crowdfunded debt securities will be allowed within the new Innovative Finance ISA from the autumn of 2016. However, equity crowdfunding will not be included at this stage.
  • ISA, Junior ISA and Child Trust Fund annual subscription limits remain at their current level for 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.
  • We agree that P2P Lending should be put on an equal tax footing to other investments. However, we question whether, this early in its evolution, that it should enjoy the status that ISA qualification will bring, we would prefer to see the sector go through a full market cycle which would act as a test of credit quality on these types of platforms. In the meanwhile we would be happy to see a modest tax free allowance for interest income from P2P loans.

Second-hand annuities reform

  • The Government is to press ahead with plans to allow pensioners to sell-off their annuities.
  • Further details on this measure, including the framework for the consumer protection package will be unveiled next month.
  • It is expected to be 2017 before the programme is launched and we’ll keep you updated with any developments.

Home sellers face much tighter deadlines on CGT

  • By 2019 Capital Gains Tax (CGT) will have to be paid within 30 days of selling a residential property; currently individuals have up to 21 months to make payment.
  • This will not affect gains on main residences that are exempt due to Private Residence Relief.
  • The acceleration of tax collection will be facilitated through the introduction of digital tax accounts and the Government will consult on this next year.

Renewables lose social investment tax relief

  • The government has u-turned on its plans to allow renewable energy projects to be held within Social Investment Tax Relief (SITR) schemes.
  • This move makes sense as it brings it in line with venture capital trusts (VCTs), Seed Enterprise Investment Schemes (SEIS) and Enterprise Investment Schemes (EIS).

To view the Spending Review and Autumn Statement documents, visit: https://www.gov.uk/government/topical-events/autumn-statement-and-spending-review-2015

About the author: Jeannie Boyle

Jeannie has been working in financial services for over 10 years. She joined EQ in 2008 as a Technical Consultant and since 2010 has been a Director of the firm. When providing advice, Jeannie focuses on clear communication, so that her clients fully understand the facts, options and recommended solutions, enabling them to make well-informed decisions. As a Director, Jeannie concentrates her efforts on ensuring the advice provided across EQ is of an exceptional standard, putting in place processes and systems to ensure our clients remain at the heart of our business. Jeannie is a Chartered Financial Planner, a Fellow of the Personal Finance Society and in 2015 won Money Management’s Ethical Financial Planner of the Year Award. She appears regularly in national and trade media outlets discussing personal finance issues. Outside of work, Jeannie enjoys yoga, hiking, triathlons and live music.

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