Phillip Hammond will give his first Autumn Budget on Wednesday 22 November. As we’ve already had a Spring Budget this year, it is unlikely there will be many major changes. But there are plenty of early predictions of what the Chancellor has planned, including a shake up for Stamp Duty, key changes to pensions and a review of the Enterprise Investment Scheme.
According to a report in The Telegraph, the Chancellor wants to ‘restack the deck for the next generation’, with rumours suggesting a ‘tax on age’ to fund tax breaks for younger people. This plan could see pension relief cut for older workers to fund a reduction in National Insurance Contributions for workers in their 20s and 30s.
Although just a rumour, some experts see this ‘misguided measure’ as an almost certainty, as the government looks to raise revenue in a slowing economy.
Pension tax relief could also be under fire from the Chancellor. It is thought the Government may move to a flat rate of around 33 per cent, which would hit middle earners harder. However, pensions experts feel the Chancellor should promise not to change tax relief until after Brexit, to give savers certainty for the future
After major changes to pension allowances and buy-to-let mortgage interest relief, tax experts are predicting that the Enterprise Investment Scheme (EIS) could be hit next.
Introduced in 1994, the EIS provides tax relief worth 30% for investments in high-risk companies, plus Capital Gains Tax exemption on disposal of the shares after a set period. While the EIS has been a useful source of finance for start-up companies, many view it as a way for the wealthy to avoid paying up to £300,000 of tax.
The scheme has been put under review this year so experts say it’s possible the November Budget could set out changes, with predictions of the relief being cut from 30% to 20% and an increase in the period shares have to be held for.
While stamp duty revenue has hit a record high, the amount of house sales has plunged. Critics say Stamp Duty is a major deterrent for home movers, putting pressure on the UK housing market, and are calling for the government to remove Stamp Duty for older homeowners, which would encourage more to downsize and free up homes for younger families.
Recent research by homebuilder McCarthy & Stone showed pensioners would be more likely to move to smaller homes if they were exempt from Stamp Duty, freeing up housing and generating activity in the market worth £186million.1
However, there have been reports that the Chancellor could, in fact, scrap Stamp Duty for first-time buyers instead, as part of his plan to win back younger voters and promote ‘intergenerational fairness’. He is also set to give a £10 billion boost to the Help to Buy scheme.
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1 Source: https://www.mccarthyandstone.co.uk/media-centre/national-press/downsizing-exodus–57-million-elderly-eye-a-move-now-rising-to-11-million-in-under-twenty-years/