Farming News - Five things to watch out for in the Autumn Statement
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Five things to watch out for in the Autumn Statement
Chancellor Jeremy Hunt needs to plug the hole in the public purse in his Autumn Statement next week (Thursday, October 17). Here, financial advice firm NFU Mutual share five things to watch out for.
- Reducing the pension annual allowance
Sean McCann, Chartered Financial Planner at NFU Mutual, said: “Pension tax relief costs the Government £48.2bn each year, and more than half of that goes to higher and additional rate taxpayers but changing the rates would be complex.
“Instead, the Government could reduce the Annual Allowance. You can currently put £40,000 into a pension each tax year but slashing that to £30,000 or even £20,000 to align with the annual ISA allowance would save huge sums.
“However, the population is not saving enough for retirement so Jeremy Hunt will need to tread carefully.”
- Increase CGT rates – but not as high as Income Tax
Sean said: “If the Chancellor wants to target those with the broadest shoulders, he could look at Capital Gains Tax. CGT is currently charged at 10% and 20% - plus an additional 8% if the gain is from residential property - but the Office of Tax Simplification has previously recommended aligning the rates with Income Tax.
“Aligning CGT with Income Tax may be viewed as disincentivising enterprise so increasing the rates to 20% and 30% and retaining the 8% surcharge on residential property would be a compromise that would still raise increased revenue for the Treasury.
“Most CGT comes from a small number of taxpayers who make the largest gains, and this move would help raise further money from that group.
“The Chancellor could also reduce the CGT annual exemption of £12,300 in a move that would see an increasing number caught by the tax.
"Latest figures suggest CGT is paid by 323,000 people but the OTS estimated reducing that annual exemption to £5,000 would double that number and reducing it to £1,000 would nearly triple it.”
- Extending the big freeze on Income tax bands
Sean said: “Thresholds for income tax and child benefit tax have already been frozen until April 2026 by Rishi Sunak when he was Chancellor. Now it’s likely he will freeze them a further two years until 2028.
“As wages grow to keep pace with inflation, more people will find themselves being dragged into paying income tax at 40% or 45% for the first time.
“Those who find themselves being tipped into higher rates of tax should consider paying more into their pension to reduce their taxable earnings.”
- Overdue simplification of death duties
Sean said: “Inheritance tax is unnecessarily complicated and ripe for reform, which could also provide Jeremy Hunt an opportunity to raise some revenue.
“Getting rid of the myriad of gifting allowances in favour of one annual gifting allowance of £15,000 would help simplify the tax for the increasing number of families who fear being caught by inheritance tax.
“The Government could also remove the rules that wipe Capital Gains Tax on death if you claim Business Property Relief, meaning those families who sell businesses they inherit would pay CGT on the sale.”
- Targeting preferential tax treatment of holiday lets
Sean said: “The pandemic created a boom in domestic holidays, and Jeremy Hunt could target furnished holiday lets after recommendations from a recent report from the Office of Tax Simplification.
“Furnished holiday lets can benefit from significant tax advantages not enjoyed by those who own buy to let properties. These include more favourable tax relief on costs including mortgage interest and the availability of capital gains tax reliefs if they sell or give away a property.
“On the back of the OTS recommendations it’s possible that the Chancellor could remove many of the tax benefits enjoyed by owners of furnished holiday lets and raise some much-needed revenue.”