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What the Chancellor did not announce in the Autumn Statement

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Despite all of the coverage of yesterday’s Autumn Statement, and rumours of what was contained within it, one its most striking aspects was just how little it had in it to excite financial commentators.

Tilney Bestinvest’s managing director Jason Hollands, says given the Chancellor’s penchant for pulling a rabbit out of the hat with his Budgets and Autumn Statements – with regard to changes to pensions, ISAs and VCTS – many were expecting a potential nasty surprise yesterday to make up the expected shortfall in achieving his deficit reduction targets.

These, says Hollands, included rumours of an acceleration in plans to reduce pension tax reliefs for high earners, to head off a rush of “last chance saloon” contributions. However, he adds that with the exception of a tighter timetable for settling capital gains tax bills on the disposal of residential property assets, the Statement had little to get people excited by.

“This is no bad thing,” says Hollands. “Continual revolution can be wearing for the public. ISA and Junior ISA allowances, which are subject to annual adjustments, will remain unchanged next year, reflecting the evaporation of inflation.

“There was no news on the size of the long promised ISA for holding peer-to-peer loans, to be known as the Innovation Finance ISA, which seems subject to perpetual consultation.”

Hollands says that a “tiny further tweak” to the rules governing tax-advantaged venture capital schemes – excluding all energy generation activities – is just a catch all exclusion, tidying up any activity in the space that was not already caught in previous amendments. “It means little in practice,” he says.

While no changes were announced on pension reliefs for high earners, Hollands says it did come with a warning of what may be to come.

The Statement read: “The government remains concerned about the growth of salary sacrifice arrangements and is considering what action, if any, is necessary. The government will gather further evidence, including from employers, on salary sacrifice arrangements to inform its approach.”

Hollands responds: “High earners should therefore recognise that the days of pensions reliefs of up to 45% are numbered, and even relief at 40% could be set to disappear in the Government’s review.

“But until the Budget at least, the door remains ajar for high earners to make a substantial pension  contribution in respect of the current year and mopping up any initialised allowances from the three previous tax years under the carry forward rules, with generous levels of reliefs. To borrow the motto of the Chancellor: high earners should ‘fix the roof (on their pension) while the sun is shining’.”