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Autumn Budget 2018

The Autumn Budget 2018 was presented on 29th October by the Chancellor of the Exchequer, Philip Hammond. The complete Budget document can be accessed here.

What happened?

The key points raised during the Budget speech that are relevant to Thistle’s clients are set out below.

Brexit

Philip Hammond has increased Brexit preparation funding by another £500m in the Budget. After allocating an initial £2.2bn to a new Brexit preparations department, Hammond noted in last year’s Budget that a further £1.5bn would be available for the purposes in last year’s Budget. That figure will rise to £2.0bn.

Corporate Taxation

Philip Hammond plans to introduce a UK Digital Services Tax. It will only be paid by profitable firms that have at least £500m a year in global revenues. There will be a consultation first before the tax comes into effect in April 2020. It is expected to raise more than £400m a year.

He has decided not to scrap entrepreneurs’ relief, but has made the conditions for qualifying for it stricter. To ensure that it is available to genuine entrepreneurs, the Government will extend the minimum qualifying period from 12 months to two years. However, Hammond has said that he wants the UK to be a leading global player in global technology, so would not scrap the relief entirely.

Private Finance Initiative (PFI) contracts

These are to be abolished at an undetermined time in the future and the UK Government will no longer use their successor, PF2, for new projects.

Personal taxation

From April next year, the personal income tax allowance will be £12,500 and the Higher Rate Threshold will be £50,000.

Investment

The lifetime allowance for pension savings will increase in line with CPI for 2019-20, rising to £1,055,000. The band of savings income that is subject to the 0% starting rate will be kept at its current level of £5,000 for 2019-20.

The adult ISA annual subscription limit for 2019-20 will remain unchanged at £20,000. The annual subscription limit for junior ISAs for 2019-20 will be uprated in line with CPI to £4,368.

The Government will publish a consultation in 2019 on draft regulations for maturing Child Trust Fund accounts. The annual subscription limit for Child Trust Funds for 2019-20 will be uprated in line with CPI to £4,368.

Cryptoassets

The Cryptoassets Taskforce was launched at the International Fintech Conference in March 2018. Following extensive work by HM Treasury, the FCA and the Bank of England, the Cryptoassets Taskforce report has been published alongside the Budget. The report sets out the UK’s approach to cryptoassets and distributed ledger technologies in financial services, including actions that will allow innovators to thrive and the benefits of these new technologies to be realised while at the same time mitigating the risks that arise from cryptoassets.

Patient Capital

The Autumn Budget 2017 announced an action plan to unlock £20 billion of finance for innovative high-growth firms and has established a taskforce to address the barriers to pensions investment in patient capital. With total assets under management expected to exceed £1 trillion by 2025, defined contribution pension schemes have a vital role to play in long-term financing for UK growth and innovation. Following The Pensions Regulator’s updated guidance for pension schemes considering patient capital investment, the Budget announced that:

  • • through the British Business Bank, the Government will support pension funds to invest in growing UK businesses. Several of the largest defined contribution pension providers in the UK have committed to work with the British Business Bank to explore options for pooled investment in patient capital, including Aviva, HSBC, L&G, NEST, The People’s Pension, and Tesco Pension Fund,
  • • the FCA will publish a discussion paper by the end of 2018 to explore how effectively the UK’s existing fund regime enables investment in patient capital. This will accompany the ongoing work of HM Treasury’s Asset Management Taskforce to explore the feasibility of a new long-term asset fund,
  • • the Department for Work and Pensions will consult in 2019 on the function of the pensions charge cap to ensure that it does not unduly restrict the use of performance fees within default pension schemes, while maintaining member protections, and;
  • • the FCA will consult by the end of 2018 on updating the permitted links framework to allow unit-linked pension funds to invest in an appropriate range of patient capital assets.

Pensions cold calling

The Government is publishing a response to its consultation alongside the Budget and will shortly be implementing legislation to make pensions cold calling illegal.

Next steps

Thistle may follow up on some of these announcements in future updates.

How Thistle can help you

If you are concerned about the implications of any of the issues raised in this update and would like advice or help, please contact Thistle on 020 7436 0630 or email us info@thistleinitiatives.co.uk. Thistle can provide a full range of compliance services, including help with FCA or PRA authorisation, advice on how to improve your systems and controls, past business and complaint handling reviews and remedial solutions.