28th November 2014
This year has seen an unprecedented shake up of the pensions and savings world but there are still expected to be some surprises when the chancellor takes to the stage for next week’s Autumn Statement.
Next Wednesday, chancellor George Osborne will announce the Autumn Statement (despite it being winter) and he has been urged to stop tinkering with pensions and focus on growth.
Brewin Dolphin division director of financial planning Simon Blowey said the Treasury could do a number of things to help the economy and savers next week.
‘Britain needs to be allowed to grow,’ said Blowey. ‘By softening HMRC’s stance on legitimate tax planning, allowing the pension system to settle down a bit so that savers can trust it and creating and supporting schemes that encourage taxpayer investment in British business, we believe the government can help it to do so.’
Top of the wish list from Blowey is ‘surety on pensions’ following the upheaval of the Budget, state pension reforms, increased flexibility and myriad changes to the tax system.
‘The welcome and revolutionary changes to pensions need time to bed in, be properly understood and simply communicated to savers – especially those nearing retirement who face some bewildering choices. Let’s see some assurances from the government that there are no further big changes on the horizon,’ he said.
While many of us would like to see tax avoidance tackled, Blowey wants to see HMRC soften its stance on legitimate tax planning. This would encourage investors to put money into venture capital trusts (VCTs) and enterprise investment schemes (EIS), which boost the economy.
‘A general anti-abuse rule has been established, but there is a danger that HMRC is still treating statutory reliefs such as EIS and VCT planning with suspicion and this has investors running scared,’ he said. ‘The Treasury needs to encourage, rather than hinder or frighten investors in such areas, and focus upon the wider public benefits as the underlying investment encourage huge economy generation.’
This tax is a bugbear for an increasing number of families who have seen the prices of their modest family home soar and their estate pushed into the 40% IHT bracket. This is because the nil rate band of £325,000, on which IHT is not incurred, has not increased since 2009.
‘With a nil rate band increase of less than £100,000 in the last 15 years, one in 20 households are caught by IHT,’ said Blowey. ‘By 2019 – now only four years away, it is predicted to be one in10 households – scarcely the rich minority the tax was meant to hit. We would like to see the IHT nil rate band raised to £500,000.’
The ISA allowance was increased to a huge £15,000 in the Budget – coining the term New ISA – but Junior ISAs were left behind. Blowey said the Autumn Statement is the perfect time to bring the allowance up.
‘The current Junior Isa allowance of £4,000 a year is far too low to encourage real saving for university fees,’ he said. ‘Increase the Junior ISA allowance to match the New ISA. This will encourage parents to really save for their children’s future – when this cash will be much needed.’
Another pernicious tax unloved by homebuyers, stamp duty is due for reform to help younger and older buyers, according to Stephen Williams, divisional director of UK equity research.
‘We’d like to see the chancellor radically reform stamp duty,’ he said. ‘It should be paid on the sale of a house, rather than the purchase, making it easier for first-time buyers to find sufficient money to buy a house and capped for the over-65s, to allow them to downsize more easily – which would in turn free up homes for struggling families.’