The Chancellor, Phillip Hammond, announced the date of his first Autumn Budget as Wednesday 22 November and this will be his second Budget of 2017; the first Autumn Budget and the first after the snap general election.
Traditionally the first Budget of any new parliament gives the opportunity for a Chancellor to administer the ‘medicine’ of tax increases, because doing so at this stage gives the electorate the maximum time to forget the taste of measures before returning to the polls.
On this occasion Hammond will likely be more reserved with his dosage. He doesn’t have an absolute free hand this time, even though in theory the government has a majority for Budget legislation thanks to support from the DUP. Even his own backbenchers can block his best made plans, as the Spring Budget climb down on class 4 national insurance contributions (NICs) showed.
So, what can we expect on 22 November?
The answer is less clear than usual.
For many years the contents of the Spring Budget were ‘trailed’ in the earlier Autumn Statement, however in 2017 there has been no such statement ahead of the Autumn Budget – the first of the new Spring Statements will not arrive until 2018.
The latest government finance figures suggest that the Chancellor will be borrowing less than was projected in March which gives him some ‘wriggle room’, however, there are many demands on any spare cash he can find – from replacing the lost extra class 4 NICs income to addressing calls for higher public sector pay and reduced tuition fees.
Only this summer, David Gauke, the secretary of state for work and pensions and a former Treasury minister, told a conference that he did not foresee any ‘fundamental’ changes to pensions tax relief. Nevertheless, there remains a possibility that the Chancellor could make some further tweaks to the rules on pension relief, such a further reduction in the annual allowance – the maximum amount of pension savings an individual can have each year that benefits from tax relief – so, if you are considering a pension contribution in this tax year then making it before 22 November could be a wise precaution, but do check with us first on how you are affected by the existing rules.
For Pensions and Tax planning advice please get in touch.
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