Autumn Statement was food for thought

08 Dec 2016

For compulsive viewing, I’m A Celebrity Get Me Out of Here and MasterChef have nothing to fear from repeat screenings of the Autumn Statement by the new chancellor.

Some felt Philip Hammond was too timid and should have served up some big tax breaks, while others thought that – given the risks of the Brexit vote – he was too profligate.

Nonetheless, the reality is that what he said may have more impact on you, and your clients, than you might have first thought.

Despite the Autumn Statement not being a Budget, it has increasingly become almost as important as the traditional Spring Budget, leading Mr Hammond to announce that from next year we will in fact have a full Autumn Budget. 

As a result, the Spring Budget disappears and will simply be a financial statement of the nation’s finances without any major fiscal changes. It remains to be seen how long this chancellor, or future ones, can resist throwing in some tax changes to capture the political limelight. Not very long, I suspect. Moving to an Autumn Budget should give time for proper consideration to be given for whatever actions are appropriate. 

Another important aspect of the Autumn Statement was the chancellor’s comments on pensions, which in essence were threefold. 

The first was what he did not say or do in respect of higher rate tax relief and overall limits on pension funds. None of these were touched, despite the expectations to the contrary, and I would be astonished if they are not fundamentally changed next spring. 

He did, however, attack the recycling of pension benefits and contributions to limit the abuse of the current tax reliefs.

Lastly, he flagged very clearly that the chances of the so-called “triple lock” surviving beyond 2020 were remote. I believe the “triple lock” has been an impossible commitment for any government to give, as it almost guarantees that one day the state pension will exceed the average wage, which would clearly be economically untenable. 

Nonetheless, it is a political hot potato and Mr Hammond deserves some credit for being prepared to tackle the issue head on. 

To sum up, it is too early to sign the new chancellor up for Celebrity MasterChef; nonetheless, he has served up a balanced meal that will hopefully prove reasonably palatable for most of us.

Ken Davy is chairman of SimplyBiz Group


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