Whilst many of the rumoured pension changes did not get introduced in the budget, here are some the key points relating to pensions and personal finances from Philip Hammond’s Autumn Budget:
Tax Free Allowances
The tax-free personal allowance on income tax is to rise to £11,850 in line with inflation in April 2018. The higher-rate tax threshold will rise too, increasing to £46,350. In addition, the National Living Wage will rise by 4.4% in April, from £7.50 to £7.83
The State Pension
It was confirmed that the full state pension will rise by 3% in April 2018 taking it to £125.95 a week. The new state pension will also be increased too due to the triple lock system, rising to £164.35 per week (an increase of £4.80). That too commences in April 2018.
Lifetime Pension Allowance
The lifetime allowance for pension savings is increasing too, in line with Consumer Price Index (CPI), rising to £1,030,000 for 2018/19. However, with the current lifetime limit standing at £1 million this represents a very marginal increase. However, it is the first rise in the lifetime pension allowance for 7 years.
The rumoured changes to the way tax relief on pensions is calculated have not been introduced, nor has any formal announcement been made on when a decision or review of the system may be made.
The annual ISA limit is to stay at £20,000 per person but each of the various ISAs have their own rules and limits in line with their designed purpose (which our advisors can talk you through).
The IHT nil rate band is to stay at the current rate of £325,000 until April 2021 but the residence nil rate band will increase from £100,000 to £125,000. This will mean that, from April, couples can leave assets up to £900,000 without and IHT.
Should you have any questions arising from the budget and how it might affect your financial position please phone us on 0800 131 0322 and one of our friendly experts will happily discuss it with you.