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No news is good news – the 2015 Autumn Statement

No news is good news – the 2015 Autumn Statement

We’ve all got so used to this Chancellor pulling a rabbit out of the hat in his Budgets and Autumn Statements with regard to further tinkering with pensions, ISAs and venture capital schemes. Therefore recent weeks have inevitably seen widespread brooding over potential “nasty” surprises that might spring from the Autumn Statement to make up an expected shortfall in achieving his deficit reduction targets. These included rumours of an acceleration in plans to reduce pension tax reliefs for high earners, to head off a rush of “last chance saloon” contributions.

As it transpires, with the exception of a tighter timetable for settling Capital Gains Tax bills on the disposal of residential property assets, the Autumn Statement had little to excite financial services commentators, which is no bad thing. Continual revolution can be wearing for the public.

Individual Savings Account (ISA) and Junior ISA allowances, which are subject to annual adjustments, will remain unchanged next year, reflecting the evaporation of inflation. There was no news on the size of the long promised ISA for holding peer-to-peer loans, to be known as the Innovative Finance ISA, which seems subject to perpetual consultation. A tiny further tweak to the rules governing tax-advantaged venture capital schemes – excluding all energy generation activities – is just a catch-all exclusion, tidying up any activity in this space not already caught by previous amendments, and means little in practice.

The Government has already announced another drastic cut in the pensions lifetime allowance, from £1.25 million to £1 million from next April, and a tapering down of the reliefs for those earning £150,000 or more, and is committed to respond on its consultation on the future of pension tax reliefs in the next Budget. It should also be noted that the Autumn Statement warns “the Government remains concerned about the growth of salary sacrifice arrangements and is considering what action, if any, is necessary. The Government will gather further evidence, including from employers, on salary sacrifice arrangements to inform its approach”. You have been warned.

High earners should therefore recognise that the days of pension reliefs of up to 45% are numbered, and even relief at 40% could be set to disappear in the Government's review. But until the Budget at least, the door remains ajar for high earners to make a substantial pension contribution in respect of the current year and to mop up any unutilised allowances from the three previous tax years under carry forward rules, with generous levels of reliefs. To borrow the Chancellor’s motto: high earners should “fix the roof (on their pension) while the sun is shining”.

The value of your investment can go down as well as up, and you can get back less than you originally invested.

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