Autumn Statement: Thoughts on tax changes from the Private Wealth perspective
Despite rumours in the build up to the Autumn Statement, Chancellor Jeremy Hunt made no announcements yesterday about the abolishment, reduction or otherwise of Inheritance Tax. We suspect that there may still be changes afoot, probably to be included when both the Labour and Conservative Parties draw up their election manifestos. For the time being, our message is that it's no change, but watch this space.
One interesting item buried in the small print is the removal (from April 2024) of the earnings threshold for submitting self-assessment tax returns. According to the Treasury this means that over 300,000 higher earners will no longer need to submit a return where their tax can all be collected via PAYE. Surely good news under the 'tax simplification' heading, as long as HMRC can get the tax codes right.
Also under the same heading, and of relevance to anyone who deals with HMRC, is the announcement that there are going to be some big increases to HMRC's funding as part of a stated commitment to tackle tax-avoidance. The increases start off (relatively) modest at an additional £95m in 2023/24, but rise steeply by an extra £515m in 2024/25 and over £1bn more by 2025/26. This seems likely to be one area of policy that will withstand a general election result, and it will be interesting to see what impact it has on the ground.
In general, though, the Autumn Statement was quiet on personal taxes, save for some significant reductions to National Insurance contributions for both the employed and self-employed which will take effect from 6 January 2024. Reviewing the small print, there are also some welcome clarifications for Individual Savings Accounts (ISAs), although the annual limits remain frozen at their current levels for the 2024/25 tax year. And finally, the government has also committed to the removal of the pensions lifetime allowance from the same date, which will undoubtedly lead to speculation about what (if anything) will replace it.
All in all, this was an interesting if slightly muted Autumn Statement, perhaps more notable (in tax planning terms) for what it didn't say than what it did.
This comment was authored by Will Ford, Partner; Emily Pike, Partner; and Caroline Pellow, Practice Development Lawyer at Womble Bond Dickinson.