For instance:
- A real boost for Individual Savings Account (ISA) annual subscription limit for children with the threshold moving to £9,000 from £4368. The adult Isa annual subscription limit does however remain unchanged at £20,000.
- The Lifetime allowance for pensions will increase in line with CPI for 2020-21, rising to £1,073,100
- For high earners there was also significant changes announced for the tapered annual allowance for pensions.
The pensions annual allowance is the maximum amount of tax-relieved pension savings that can be accrued in a year.
For those on the highest incomes, the annual allowance tapers down from £40,000.
HM Treasury has reviewed the tapered annual allowance and its impact on the NHS, as well as on public service delivery more widely.
To support the delivery of public services, particularly in the NHS, the two tapered annual allowance thresholds will each be raised by £90,000.
This means that from 2020-21 the “threshold income” will be £200,000, so individuals with income below this level will not be affected by the tapered annual allowance, and the annual allowance will only begin to taper down for individuals who also have an “adjusted income” above £240,000.
For those on the very highest incomes, the minimum level to which the annual allowance can taper down will reduce from £10,000 to £4,000 from April 2020. This reduction will only affect individuals with total income (including pension accrual) over £300,000.
Proposals to offer greater pay in lieu of pensions for senior clinicians in the NHS pension scheme will not be taken forward.
The Chancellor also delivered what many had expected in the way of changes to Entrepreneurs relief – notably a reduction in the Entrepreneurs’ Relief lifetime limit.
From 11 March 2020, the lifetime limit on gains eligible for Entrepreneurs’ Relief (which offers a reduced 10 per cent rate of Capital Gains Tax on qualifying disposals) was reduced from £10 million to £1 million.
This was in response to evidence that it has done little to incentivise entrepreneurial activity and that most of the benefit accrues to a small number of very affluent taxpayers.
Corporation tax (CT) rate remained unchanged at 19 per cent.
Broader allowances will increase in line with inflation where appropriate and once we have been able to assess the detail of the above announcements, we will provide further guidance and clarity on what it means day to day.
Hints from the budget to look out for
The Chancellor also announced a few reviews which may impact our sector going forward.
Although it is unlikely we will see these anytime soon it is still worth being aware of.
- A Review of the UK funds regime
- A consultation on the tax impact of the withdrawal of the London Inter-Bank Offered Rate (LIBOR) - an industry working party to consider how financial services are treated for VAT service.
- There was also additional focus on the self-employed and access to mortgage advice and calls for raising the standards in the market for tax advisers.
This will no doubt link to the focus by HMRC on tackling promoters of tax avoidance schemes
FCA Business Plan 20/21
The FCA has published its latest business plan.
Firm culture remains a central focus as in previous years meaning the “4 key culture drivers in firms – purpose, leadership, approach to rewarding and managing people, and governance – and their effectiveness in reducing the potential harm from firms’ business models and strategies”.
It is interesting to note that there will be increased attention paid to smaller firms as part of the supervision plan.
