The Chancellor’s recent Autumn Statements have resembled mini-Budgets, but 2015 was rather different. Mr Osborne’s primary goal was to deliver the Spending Review, so there was heavier emphasis on departmental expenditure and the £4,000bn of total government expenditure over the next five years. Nevertheless, the Chancellor did make a number of tax-related announcements.
The housing market will feel the impact of the higher rates of stamp duty land tax set to increase by 3% for the purchasers of second homes and buy-to-let properties from 1 April next year.
A money-spinner for the Chancellor will be the new apprenticeship levy to be introduced from April 2017 with a 0.5% levy for employers with a payroll of over £3m.
There was good news for small businesses with the extension of small business rates relief for another year. With local councils also being given the power to control local rates, this looks likely to be an interesting development.
Pensions, so often in the news lately, was only subject to minor announcements, with proposals for pensions tax relief deferred until next year. The rate for the new single tier pension coming in from April 2016 was set at £155.65 a week.
The Chancellor also announced that he had scrapped his controversial proposals for changes to tax credits at a cost of £3.4bn in 2016/17.
Please click here to view our summary of the key announcements in the Chancellor’s Autumn Statement 2015. We hope you will find it useful and informative.
As ever, discussion will continue to rage over the measures announced. Please get in touch with us if you think you’re affected by anything you have read.
A long-awaited meeting of the US Federal Reserve did not result in an interest rate rise.
2 p.m. New York time on Thursday 17 September had been much anticipated by investment professionals around the world. It was the hour when the Federal Reserve Open Market Committee would release its meeting statement, revealing its latest interest rate decision. Ahead of the announcement there had been much speculation that an interest rate ‘lift-off’ would happen. Even the head of the Federal Reserve, Janet Yellen, had hinted as much.
When the time arrived, there was something of an anti-climax. The decision was to keep rates on hold, which at first sight might have been expected to be good news. However, the market thought differently:
- 13 of the 17 members of the Federal Reserve Board (Fed) still thought 2015 was the year in which to start raising interest rates. So the waiting game continues.
- The statement said “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term.” This prompted a familiar market worry: what does the Fed know that we don’t?
The next Fed meeting was in late October, but this was a meeting where there was no scheduled press conference afterwards. The final meeting of the year on 15-16 December, complete with press conference, is now being penciled in as when the decision to increase rates will be taken. In the interim, we can expect more market gyrations as the experts attempt to second guess Ms Yellen and company.
If volatility concerns you, do talk to us before taking any action.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.
The Chancellor has announced the date of the Autumn Statement
In late July, the Chancellor announced that the results of the Spending Review would be announced on 25 November. At the time he made no reference to the Autumn Statement, probably because the focus was still on his July Budget. However, in the beginning of September an exchange between Mr Osborne and the Office for Budget Responsibility revealed, much as expected, that 25 November will also see the publication of the Autumn Statement.
In recent years the Autumn Statement has increasingly become more like a second Budget – last year’s was particularly notable in this regard. This time around there may not be quite such a Budget overlay, if only because the Chancellor has already presented two budgets in 2015. In July’s he announced most of the income tax details for next tax year, revising figures he had put forward in March. It is difficult to imagine he will make further changes on this front.
Nevertheless there will be two areas worth watching:
- Pensions – The July Budget was accompanied by a consultation paper on the future of pension taxation, which contained little detail, but hinted at the end of higher rate tax relief – and possibly all tax relief – on contributions. The results of that consultation, which ended last month, could appear in November. If you are contemplating making a one-off pension contribution in coming months, it may be wise to act before 25 November.
- National Insurance Contributions (NICs) The Treasury is in the throes of overhauling NICs for the self-employed and has said it aims to scrap the weekly Class 2 payment and just have a Class 4 earnings related payment. Tellingly, self-employed NICs were left out of the legislation to freeze NIC rates (along with income tax and VAT rates). The July reforms on dividend taxation, which take effect from 2016/17, were designed to discourage the self-employed from incorporating. We might see why in November – some commentators are predicting a rise from 9% to 12% in the main Class 4 rate.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances. The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.