With everything from the NHS to electric cars covered in the Autumn Budget, it can be hard to know exactly which parts of the announcements made by Philip Hammond in his speech on 22nd November will affect your own personal allowances and to what degree. With that in mind, let’s have a look at just how the plans laid out by the Chancellor might impact your financial position.
The announcement that the pensions lifetime allowance will increase with inflation rates is a positive move, and the first rise applied to the amount you can save into a pension since April 2010. For the 2018-19 financial year, the lifetime allowance will go up from £1 million to £1,030,000 in order to match CPI, which could generate tax savings for many people. For example, those who choose to take the entire £30,000 increase as a lump sum after April 2018 would make a saving of 55% on the tax due compared to the previous allowance, which in real terms would mean an extra £16,500 income for the retiree.
For those still working, from April next year the personal allowance will be increased from the current figure of £11,500 to £11,850, meaning that no income tax will be paid on any earnings up to that amount. The higher rate threshold will also be increased from £45,000 to £46,350. What this means in real terms is an extra £70 for basic rate taxpayers, with those on the higher rate getting £140 more.