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Autumn Statement 2016: How will it affect your personal finances?

 

Autumn Statement 2016: How will it affect your personal finances?

As Phillip Hammond’s first major fiscal statement since the EU referendum, Autumn Statement 2016 was not the headlining event that it perhaps could have been.

In the years to come, Autumn Statement 2016 will probably be most noteworthy for signalling the end of George Osborne’s approach to government spending. Budget deficit targets were pushed further into the future and multibillion pound government investment plans were announced. 

Nonetheless, Autumn Statement 2016 still contained measures that will affect the finances of individuals.  Here are 3 important announcements that could impact your personal finances:

Income tax

Hammond reiterated the government’s commitment to increasing the personal allowance to £12,500 by the 2020/21 tax year. The current personal allowance stands at £11,000 and will increase to £11,500 in April 2017.

In additional news that will be welcomed by higher rate taxpayers, Hammond announced that he will not go back on George Osborne’s target to increase the higher rate threshold to £50,000.  Plans for raising the threshold will remain, and will increase to £45,000 from April 2017 and £50,000 in the 2020/21 tax year.

New savings account

NS&I will launch new savings accounts in spring 2017. The exact details are yet to be confirmed but the plans are to allow savers to deposit between £100 and £3,000 for a 3-year fixed term and earn 2.2% interest per year on your money.

Despite carrying the name ‘investment bond’, you won’t actually be investing in anything but instead be putting money into a fixed-rate savings account.

 Fees of equivalent to 90 days’ interest will be charged if you want to access your money before the end of the 3-year term.

Tax on salary sacrifice schemes

The tax benefits on a number of salary sacrifice schemes will end for new employees on 5 April 2017, potentially increasing the tax and national insurance bills of thousands of employees.

Currently tax-free schemes such as company cars, mobile contracts and health screening checks will be charged tax and national insurance from 6 April 2017.

Not all schemes will be affected: pension, childcare, cycle to work schemes and ultra-low emission car schemes will remain tax-free.

Employees who sign up to most salary sacrifice schemes before 4 April will retain its tax-free status until April 2018, or in the case of schemes relating to cars, school fees and accommodation, April 2021.

Read our in-depth report on Autumn Statement 2016.

Contact us on 01628 631 056 or email geoffk@knightandcompany.co.uk for more information on how Autumn Statement 2016 will affect your personal finances.