The past 12 months or so has been quite a time for fiscal events. Last year we saw Kwasi Kwarteng’s ill-fated mini-budget containing £45bn of unfunded tax cuts, resulting market turmoil, and most of the proposals reversed weeks later by his replacement Jeremy Hunt. Then at the Spring Budget in March, Hunt’s decision to scrap the pension lifetime allowance took everyone by surprise.
The next fiscal event, the 2023 Autumn Statement, takes place on 22 November and speculation about what the government might have in store is gathering pace.
The Chancellor has already said that chopping taxes is “virtually impossible” right now given that the focus is to rein in inflation which is more than three times the Bank of England’s 2% target.
A boost for ISAs?
There are reports that Individual Savings Accounts (ISAs) could be revised to boost share ownership and encourage more people to save. HM Treasury recently commented that it is ‘receptive to ideas of how we can make ISAs more attractive to encourage people to develop a savings habit and to invest in a way that works for them’.
One move could be to merge Stocks and Shares ISAs with Cash ISAs, although there are obstacles to doing so, such as some ISA providers only offer one type. Another possible change is to increase the ISA allowance to £25,000 (it’s currently £20,000).
There are rumours that the Inheritance Tax (IHT) regime could be reformed before the general election, with its eventual abolition also a possibility. This could be a big vote winner – no taxes are popular, but negative sentiment for IHT runs particularly deep.
One option is to cut the headline rate from 40% to 25% which would reduce the average IHT bill from £214,000 to £133,750, a sizeable saving. Mr Hunt could increase the tax-free thresholds – at present, the first £325,000 of an estate (the nil rate band) escapes IHT, with anything above taxed at 40%. This threshold has been frozen since 2009/10. Another option is to alter the residence nil-rate threshold.
Taking sensible tax steps
We’ll keep you updated with any news from the Autumn Statement. Remember in the meantime that sensible tax planning can help to reduce the amount of tax you pay and safeguard your wealth for the future. We can help – please get in touch.
Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. The Financial Conduct Authority does not regulate tax planning.