Autumn Statement Review

There were no major surprises in the Chancellor’s Autumn Statement this week for pensions, savings and investments.

No change was announced to the levels of personal allowances and tax bands that will apply from 2016/17.  It had previously been announced that the personal allowance for 2016/17 will be £11,000 and the higher rate tax threshold will be £43,000.  It is worth remembering however that for those doctors with an adjusted net income of more than £100,000, the personal allowance will be reduced by £1 for every £2 of income above £100,000.  This means for incomes over £122,000 it will be completely lost.

Pensions were largely left alone after the major changes introduced in April this year.  Certain changes that were previously announced are still due to go ahead as planned:

  • With effect from the 2016/17 tax year, there will be a tapered reduction in the level of annual allowance applying to contributions to registered pension schemes by certain high-income doctors. 
  • The lifetime allowance will be reduced from £1.25 million to £1 million with effect from 6 April 2016.  Fixed Protection 2016 will be available to protect funds up to £1.25m from a lifetime allowance charge but contributions and/ or accrual will need to cease by 5th April.  Individual Protection 2016 will be available to protect funds between £1m -£1.25m valued at a specific date, probably 5th April 2016 but contributions and or accrual can continue.  The application process will be via an online system from July 2016 and HMRC will announce an interim process for those that need to rely on the protection before July. 
  • From 2016/17, pension lump sum death benefits on death at age 75 or over will be taxed at the beneficiary’s marginal rate of income tax, rather than at 45% as at present.  

Planned changes to dividend taxation are also still due to go ahead from 2016/17.  With effect from 6 April 2016 the existing system for taxing UK dividends will cease to apply.  Instead all doctors will receive a tax free annual dividend allowance of £5,000.  Above that dividends will be taxed according to the marginal rate(s) of income tax that a doctor pays - 7.5% (basic rate taxpayer), 32.5% (higher rate taxpayer) and 38.1% (additional rate taxpayer).

For ISAs, the Chancellor announced that the 2016/17 annual subscription limit for the ISA will remain at £15,240. The Junior ISA and Child Trust Fund limit will be retained at £4,080. 

If you would like to discuss the impact on your personal financial plans, please contact us on richard.higgs@wealthwestmedical.co.uk or 0117 966 5699.

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