Changes to the pensions annual allowance, stamp duty clarification and ISA allowance changes are among the main policy amendments that could occur in the Budget or at least need to be considered, according to a number of financial experts.
According to Quilter head of retirement policy Jon Greer, while the idea of fundamental reform is unlikely while the Treasury desks are battling the beast of Brexit, it is possible the government could look to replace the lifetime allowance with a lower allowance and introduce a flat rate of tax relief although this is “likely to be done in stages”.
“That’s not to say the Chancellor won’t knock on the door of pensions hoping to find a treat. The easiest and perhaps most likely way for Hammond to fill his boots is by lowering the pension allowance to £30,000.
“With the Chancellor under pressure to pull some bigger tricks to fund the NHS, he shouldn’t forget that ghosts can sometimes come in handy. Recent figures have shown gross pension tax relief is projected to be £38.6 billion, so it’s not hard to see why Hammond is eyeing it when he needs to find extra money.”
On the issue of stamp duty, tax and financial planning expert at the firm Rachael Griffin commented that the government has already announced its intention to increase stamp duty for overseas buyers, “however, as always the devil will be in the detail and that is likely to be revealed in the Budget”.
“The motivation behind the increase is sound, but the government needs to think through all the potential consequences. For instance British expats looking to love back home could be caught out as they are by definition non-UK residents.”
Griffin also highlighted the need to leave ISA’s alone or “if anything combined, so that more flexibility is offered within a single ISA – the so-called Everything ISA”.
“Reducing the amount of different types may help to iron out some of the odd quirks in the rules surrounding ISAs. For example, a 16 year old could have both a Junior ISA and a cash ISA, but not a stocks and shares ISA. Getting back to the ISA’s simple roots will help maintain its brand as a useful way to save tax free. At the very least let’s set an ISA allowance that is divisible by 12 to make regular saving even simpler.”
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