2nd December 2014
As the Chancellor puts the finishing touches to his last Autumn Statement, the last one before the General Election, the experts reveal their hopes and predictions for tomorrow’s speech:
More perks for savers and investors
Nick Hungerford, chief executive of Nutmeg, the investment platform, says: “The March Budget was excellent news for UK savers and investors, with big changes to ISAs and radical new pension rules taking up all the headlines.
“We expect the Chancellor will build upon the momentum that was created by those measures and give British families even further support, flexibility and, most importantly, tax incentives to help them plan responsibly for their long-term financial futures. While there has been some speculation that the subject of an ISA cap might make an appearance tomorrow, we are confident the Chancellor will not contradict himself in this way.
“It would be a bold step, but in an ideal world we’d really like to see the Government make moves towards amalgamating ISAs and pensions into one completely tax-free savings pot.
“We also urge the Conservatives to look at abolishing the inheritance tax for the majority of wealth brackets, if not all, so that families can save, invest and plan together as one.
“This will help bridge the significant wealth gap between generations which has been growing at an alarming rate in recent years and will cause severe problems for young adults in this country unless it is addressed swiftly and head on.”
Andrew Tully, pensions technical director at MGM Advantage, says: “We expect the Chancellor to remove the tax on joint life annuities inherited when a partner dies before the age of 75. This is a fairer deal for holders of annuities, and one which comes at a relatively small cost to the Treasury.
“The move also shows that the Government recognises the important role that annuities still have to play. While new flexibilities will offer the customer more choice, many will still want the certainty and stability that comes from a guaranteed regular income and this enables them to do so without being unfairly penalised.”
Tully also expects there to be more clarity on the guidance guarantee that is to be delivered alongside the new pension flexibilities next year.
He says: “The level of choice that comes with the pension freedoms next year has huge appeal, but also huge potential for poor outcomes. The uptake of guidance and advice will be important to helping people avoid the risks involved with making decisions about their retirement, such as not appreciating the tax implications of taking out lump sums of money, or under-estimating their life expectancy when planning.
“We need a fall back – a second line of defence – to ensure that the public are aware of the options they have and where to get the support they need to make the best decisions about their retirement income.
“With research indicating that only 2.5% of those eligible were planning to take up the guidance guarantee, many will fall through the gap without guidance or advice. The regulator must press providers of products to take more responsibility for giving customers the information they need. We need to offer people more protection.”
Tully does not believe there will be major reforms to pension tax relief as some have suggested.
He says: “However, it’s important that we do all we can to make the system simpler and encourage people to save more for retirement, starting preparations earlier and thinking in the longer term.”
Support for entrepreneurs
Hungerford says: “The Autumn Statement also represents a great opportunity for the Government to boost commerce and industry, so as to oil the wheels of economic recovery. For example, it would be great to see the Chancellor announce further measures to support small businesses and entrepreneurs in the UK so as to promote innovation and attract the cream of global talent to this country. An expansion of the excellent Enterprise Investment Schemes would be a very good place to start. London is now a thriving, much-envied global hotbed for the finance and technology industries. With Government support, other cities, particularly Liverpool, Manchester, Birmingham and Leeds, are well positioned to become established global hubs for growing industries too.
Tax avoidance clampdown
Hungerford adds: “There has been much talk of a clampdown on tax avoidance in this year’s Statement, which would curry favour with a large chunk of the voting public. Any other surprise measures will no doubt also be seen as Election bait in some quarters, though we should view the Chancellor’s announcements with half an eye on the likelihood the Tories will still be in power beyond May, in which case he’ll have to stand by the changes he reveals tomorrow.”