With the Chancellor’s Budget Announcement only a couple of days away, I thought I would share a few thoughts in this blog on some potential changes.

With the Chancellor’s Budget Announcement only a couple of days away, I thought I would share a few thoughts in this blog on some potential changes.

There is limited scope for giveaways in this as although the Office for Budget Responsibility reported that, Central Government borrowing had fallen by £2.5Bn for 2017-18 fiscal year, it was likely that the deficit will increase relative to last year.

Given this I believe that any changes will be targeted on the following areas:

1. Pensions – always a hot topic on Budget day where the Chancellor rarely misses an opportunity to review the system.

Having already reduced the Money Purchase Annual Allowance (see our  in last year’s Autumn Statement by clicking here), there is a good chance we will see another change in either;

- the amount you can save into a pension over the course of your life, or;

- the amount you can save every year.

Tax relief may also be under the microscope as the current regime costs the treasury up to *£35bn a year.

(*Pension Policy Institute - Tax Relief for Pensions Saving in the UK - July 2013).

We could therefore see a reduction in the amount high earners can claim from the current 45% to perhaps 30% or even 20%, giving a potential saving of £13bn a year.

Some have suggested that we could see a reduction in the tax-free lump sum you can take from 25% to 20%; however, this will be unpopular with voters and therefore I don’t see this happening.

2. Other tax efficient investments - Given the reductions in the amount you can save into pensions, more and more people are looking at alternate investment vehicles such as Enterprise Investment Scheme (EIS) or Venture Capital Trusts (VCTs), which give 30% tax relief on investment.

HM Treasury have been conducting a review on this (The Patient Capital Review), which is due to report back to the Government just before Budget day.

It is highly likely that action will be taken to ensure that tax relief is given only where it is genuinely driving investment in the small, innovative companies that it is aimed at.

We could therefore see a restriction in the type of companies eligible for this relief, or a reduction in the amount of tax relief available.

3. BREXIT - There is pressure on the chancellor to start planning for a “no deal” BREXIT and so it is likely we will see funds allocated to start preparing for this scenario.

4. Self-employed tax changes - Having already tried to make changes to the self-employed tax system last November we could see the chancellor returning to this area given that he is no longer restricted from the previous manifesto.

5. Diesel car scrappage scheme - We could also see details of how the government plans to implement their proposed scheme for getting the older, most polluting diesel vehicles off the road.

The Scottish Government now has control over Income tax and stamp duty (Land and Buildings Transaction tax) so other changes the chancellor may make will be less relevant to us.

We never know what the Budget will bring until the announcements on the day; however, my predictions in the above areas may be areas that are likely to be put under the spotlight.

Can anything be done about it?

If you were planning to make a pension contribution prior to the end of the tax year it may be prudent to bring that forward, if so please speak to your local Johnston Carmichael Wealth Financial Planner for further information.

Disclaimer: While all possible care is taken in the completion of this blog, no responsibility for loss occasioned by any person acting or refraining from action as a result of the information contained in this blog.

This blog represents our interpretation of current and proposed legislation and HMRC practice as at the date of publication. These may change in future.

All statements concerning the tax treatment of products and their benefits are based upon our understanding of current tax law and HMRC practices both of which are subject to change in the future. Levels and bases of reliefs from taxation are also subject to change, and are dependent on your individual circumstances.

Nothing in this blog constitutes advice to undertake a transaction and professional advice.

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