Autumn Budget 2015

The Autumn Statement and Spending Review... the biggest headline was a U-turn in cuts from the Chancellor, but there were plenty of other announcements which may affect our clients.

Here our Managing Director Paul Northmore reviews the changes, and how we can help our clients plan for them.

Pensions
There were no major changes for pensions or tax this time round.

The state pension will rise by 2.9%, or £3.35, to £119.30 a week from April, to match the rise in average earnings for existing pensioners.

This comes after the government’s promise for the following five years which ensures the state pension will rise in line with inflation or earnings.

The new flat rate state pension comes into effect next year. This will be £155 a week from April.

Speak to your adviser if you have any questions about your state pension. Whether you get the full £155 will depend on if you have a private or workplace pension or if you have additional state pension.


Wages and taxation
There was no rise to the Living Wage. This will start in April 2016 at £7.20 an hour, increasing to £9.00 an hour by 2020.


There’s also no change in the tax allowance from the Summer Budget. This will increase to £11,000 (from £10,600) for the personal allowance. Thehigher rate threshold increases to £43,000 (from £42,385).

For company shareholders who pay themselves a low salary but take dividends from profits, there is a significant change. There is a new limit being introduced for taking dividends tax free – up to £5000 only. Dividends over this amount (and any unused personal allowance) will be taxed at the following rates, depending on tax band

Basic: 7.5%;
Higher: 32.5%;
Additional: 38.1%.

However, there are vehicles to mitigate some of the impact through pension planning, so talk to your adviser if you will be affected.

First time buyers
The Chancellor announced plans to give £2.3 billion to private developers to build 400,000 news homes in England. House builders will build starter homes which will be offered with a 20% discount up to the property value of £250,000 (£450,000 in London)

If you are reading this and wondering how your children will ever be able to get on the property ladder, there may be opportunities locked up in your home. Read about equity release here.

Of course this money needs to be generated somehow, and it is the turn of the buy-to-let landlords to close this gap.

Buy-to-let and second homes

It was announced that buy-to-let landlords and second homes buyers will pay more in stamp duty. From April 2016 there will be a 3% surcharge on buy to let properties and second homes.

This may not sound like much initially but on a £275,000 buy-to-let the stamp duty will treble from £3,750 to £12,000, hence this will raise £1 billion in revenue.

It was a double blow for second home buyers and owners as the Chancellor revealed that from April 2019 Capital Gains Tax payable on second homes will need to be paid within 30 days of sale. This could mean bringing forward the payment by 22 months for some sales.

Unfortunately these headlines add to the proposals to restrict mortgage interest relief on buy-to-lets to just basic rate as announced in the Summer Budget.

It certainly feels as if the golden age of buy-to-let has been and gone - however there are still many benefits. We can look at your options if you are thinking of buying or selling your second property.


Business headlines

Finally, there was some good news for businesses.

Auto-enrolment contribution step-up will be delayed by 6 months. The increases scheduled for October 2017 and 2018 will now be delayed until April 2018/2019.

At Manning and Company we can work with you on your workplace pensions, varying from options to make sure you comply with regulation, to really adding value for your staff when it comes to financial planning.

It is also good news for organisations that would like to employ apprentices. There’s a £15,000 allowance for eligible businesses, as the apprenticeship levy has been set at 0.5% of the wage bill of the employer.

There will be 26 new enterprise zones created or extended, and this provides a variety of opportunities for local businesses. If we look at this in the context of the South West enterprise zone in South Yard, Plymouth, it has meant that businesses based there will have more freedom to expand and reinvest, thanks to a series of tax breaks and planning flexibilities.

However these budget announcements affect you, we would be happy to discuss any queries and your options.