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Blog: A quiet Budget (but eight things still worth noting for advisers)

Scott Sinclair, 30 October 2018

It was a fairly quiet Budget 2018 by all accounts, but the small print always throws up bits of interest for advisers and their clients...


You know it’s a soft Budget when a major talking point is that ISA limits will stay as nice round numbers next year.

But Philip Hammond’s speech wasn’t a huge surprise, was it?

A day after saying the government would set a new Budget if it failed to reach a Brexit deal, the Chancellor was always likely to steer clear of making any major changes to pensions or tax.

And so it was: against expectations, there were no tweaks to pensions tax relief or the annual allowance, and only a CPI-linked jump in the lifetime allowance.

But there were still a handful of announcements that advisers may want to note…

1 Pensions cold-calling

Though there was no mention of it in Hammond’s speech, the government has jumped on this one. After years of campaigning – including by a number of vociferous adviser firms – and a government consultation, it confirmed it is going to “make pensions cold calling illegal”.

The practice, it said, is “one of the most common methods used to initiate pension fraud”, and it would implement its ban “shortly”.

However, there was also confirmation the ban won’t cover calls about investment products, or activity by introducers, which leaves a potential door open for fraudsters.

2 Pension dashboards

The government has now officially backed pensions dashboards (note the plural) with an extra £5m in 2019/20 to go towards their design and development. It added they should include individuals’ State Pension. 

The Budget confirmed that the Department for Work and Pensions (DWP) will consult later this year on the “detailed design” of the dashboards. All-in, this should increase the pressure on providers who have so far been reluctant to sign-up to the concept of dashboards.

3 Property

To better target private residence relief at owner occupiers, from April 2020 the government said it will (pending a consultation) reform lettings relief so it only applies where the owner of the property is in shared occupancy with the tenant. The final period exemption will also be reduced from 18 to nine months.

Meanwhile, the government said it will also extend first-time buyers relief in England and Northern Ireland so all qualifying shared ownership property purchasers can benefit, whether or not the purchaser elects to pay stamp duty on the market value of the property.

The change will apply to relevant transactions from the date of the Budget (29 October 2018), and will also be backdated to 22 November 2017, so those eligible who have not previously claimed first-time buyers relief can amend their return to claim a refund.

4 Self-employed

There had been speculation that Hammond would reduce the pensions annual allowance from £40,000 to £30,000, or even as low as £20,000 (indeed, pension flows on the Zurich Intermediary Platform soared 98% in September compared with the previous month as savers rushed to make the most of pension tax relief).

Zurich suggested the move would be bad news for small business owners, who tend to make ad hoc pension contributions. But the government is mindful of the need to boost pensions for the self-employed. It said the DWP would publish a paper “this winter” setting out its approach to “increasing pension participation and savings persistency among the self-employed”. 

5 Tax thresholds

Chancellor Philip Hammond announced the government will raise the income tax higher rate threshold to £50,000 – and the personal allowance to £12,500 – in April next year, a year earlier than previously planned.

The thresholds will remain at these levels until (and including) 2020/21, when they will increase by CPI.

6 Capital gains tax

Legislation will be introduced in Finance Bill 2018/19, the government said, to increase the CGT annual exempt amount to £12,000 for individuals and personal representatives, and £6,000 for trustees of settlements, for the period 2019 to 2020.

7 ISAs and CTFs

Hammond said the ISA annual subscription limit for 2019/20 would remain unchanged at £20,000, while the limit for Junior ISAs would be uprated in line with CPI to £4,368.

Meanwhile, the government said it will publish a consultation in 2019 on draft regulations for maturing Child Trust Fund accounts. The annual subscription limit for CTFs for 2019/20 will be uprated in line with CPI to £4,368.

8 Taxation of trusts

Only a small mention for this one. The government said it will publish a consultation in 2018 – so in the next nine weeks or so – on how to make the taxation of trusts simpler, fairer, and more transparent.