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Autumn Budget looks to the future

Published: 23 November 2017

As widely expected, Philip Hammond’s first Autumn Budget focused on measures to support the Government’s vision of a prosperous, inclusive and innovative post-Brexit Britain.


The Chancellor’s big headline grabbing move turned out to be the abolition of Stamp Duty Land Tax for first time buyers on properties with a value of up to £300,000.

There was little in the way of drama or surprise for savers and investors. Advance rumours of a structural change to pensions tax relief, with a view to rebalancing its benefits across the generations and between higher and lower earners, turned out to be unfounded. But changes were announced to tax advantaged regimes for investing in new and developing businesses.


Pension allowances

The Lifetime Allowance for pension savings will increase to £1,030,000 from 6 April 2018 – a Consumer Prices Index related increase that the Government committed to back in 2015.

No changes were announced to the annual allowances for pension contributions.


ISA allowances

The annual ISA allowance will continue as £20,000 into the 2018/19 tax year. But for Junior ISAs it will be given a Consumer Prices Index related increase to £4,260 (it’s currently £4,128) from 6 April next year.


Tax advantaged investing in new and developing businesses

It’s currently possible to invest up to £1 million a year in an Enterprise Investment Scheme (EIS) and get income tax relief of up to 30% on what you put in (limited to the amount of income tax you would otherwise have paid in that year). These are higher risk investments though, that will not be suitable for many investors.

The Chancellor announced that this limit will now double for people investing in ‘knowledge intensive companies’, but that he will also introduce tougher tests to make sure that EIS (and similar schemes) are actually being used for their intended purpose.


Alliance Trust Savings reaction

“It seems the Chancellor has bigger political concerns than savers and investors right now” says Sara Wilson, Head of Platform Proposition for Alliance Trust Savings. “In many ways that’s a good thing but we still think a structural change to pensions tax relief could be on the cards for future budgets.”

“It’s expensive for the Government to maintain and benefits for higher earners (broadly, those earning £150,000 a year or more) have already been shaved back through the tapered annual allowance introduced last year. I just don’t think anyone can afford to relax and take its continuation at current levels for granted.”

“Those considering whether to up their pension contributions in the next year or so might want to bear that in mind. It could still be a case of making hay while the sun shines.”

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Important information

This is provided for general information only and takes no account of personal circumstances. It is not a recommendation to buy or sell. It is provided solely to support you in making your own investment decisions. If you have any doubts as to their suitability you should seek expert advice. Alliance Trust Savings does not give advice.

Laws and tax rules may change in the future without notice. The information here is our understanding in November 2017. This information takes no account of your personal circumstances which may have an impact on tax treatment.

Please be aware that the value of investments can fall as well as rise so you could get back less than you invest.

Get in to the detail

We are pleased to provide you with a full round-up of the Budget, prepared for Alliance Trust Savings by Taxbriefs Ltd.

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Alliance Trust Savings Limited is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number 116115. Alliance Trust Savings gives no financial or investment advice.