So long and thanks for the Autumn Statement
23rd November, 2016
Well there we had it, Phillip Hammond delivered his first, and as we now know, his last Autumn Statement 2016. As always we had a wish list for things that we would have liked but in the end the pensions world ended up with throwaways which fell into the curates egg category. Let’s see what he said:
- The triple lock will continue … well for now. There were strong hints that the lock and other state pension matters would be reviewed in 2020 once the impact of increasing longevity is better understood.. One wonders what affect this will also have for SPA.
- Salary Sacrifice lives to fight another day at least for arrangements relating to pensions (including advice) and a few other schemes deemed of social interest. The tax and employer NI advantages of the majority of salary sacrifice schemes are to be removed from 2017, although some are protected until 2021. This reinforces what the previous Chancellor set out in this year’s Budget and continues to be welcomed as encouragement to save for retirement with a bit of a government helping hand.
- There will be a consultation on banning cold calling and wider pension scams including giving firms greater powers to block suspicious transfers and making it harder for scammers to abuse ‘small self-administered schemes’. It is encouraging to see that the wider issue is to be considered. This is something we have called for and very much welcome. We look forward to engaging with this consultation.
- The big surprise was the consultation on the reduction in the Money Purchase Annual Allowance for anyone taking drawdown (and we hope the detail is to take and not having taken) from £10,000 to £4,000. I don’t think anyone predicted this. It does slightly fly in the face of the concept of pension freedoms but the government view is that it does not consider that earners aged 55 and over should be able to enjoy double pension tax relief, such as relief on recycled pension savings, but does wish to offer scope for those who have needed to access their savings to subsequently rebuild them. It is helpful that this is going to consultation as the full range of views and arguments can be set out.
- Amongst other technical changes involving foreign pension schemes, the tax treatment of foreign pensions will be more closely aligned with the UK’s domestic pension tax regime by bringing foreign pensions and lump sums fully into tax for UK residents, to the same extent as domestic ones.
- The government will bring in regulations early next year to modernise the rules on the taxation of dividend distributions to corporate investors, such as pension funds, to obtain credit for tax
paid by authorised investment funds and will publish proposals in draft secondary legislation in
Will there be more detail in the papers? We’ll certainly be looking carefully at these. In the meantime we will raise a toast to the demise of the Autumn Statement 2016, welcome the Autumn Budget and Spring Statement (plus ca change?) and congratulate the person who had “infrastructure” in the sweep for the word of the statement. Mr Hammond used it 21 times.