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Pensions and savings

ICAEW Tax Faculty provides analysis of the announcements relating to the taxation of pensions and savings in the Autumn Budget 2017.

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Download a PDF of the Tax Faculty's summary of the announcements on tax and related matters in the Autumn Budget 2017

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Lifetime allowance for pensions

The lifetime allowance, the maximum that can be saved in pension funds without incurring a lifetime allowance charge when funds are withdrawn, is increased in line with CPI from £1,000,000 to £1,030,000 for 2018/19.

Life assurance and overseas pension schemes

FB 2018-19 will legislate to modernise the tax relief for employer premiums paid into life assurance products or certain overseas pension schemes. The change will extend the existing exemption to cover policies when an employee nominates any individual or registered charity to be their beneficiary.

Master trust registration

HMRC powers to register and de-register master trust pension schemes and schemes for dormant companies will be introduced in FB 2017-18. The draft legislation was published for comment on 13 September 2017 and is unchanged.

ISA annual limits

The individual savings account (ISA) annual subscription limit for 2018/19 will remain unchanged at £20,000. The annual subscription limit for junior ISAs and child trust funds for 2018/19 will be uprated in line with CPI to £4,260.

Trust simplification

The government will publish a consultation next year on how to make the taxation of trusts simpler, fairer and more transparent. The complications have been added over successive years so simplification would be welcome. There have been a few attempts in the recent past to simplify the inheritance tax charges in trusts but the proposals have been more complex than the existing regime so in the main no changes have so far been made.

Offshore trusts: anti-avoidance rules

The draft legislation for FB 2017-18 introducing new anti-avoidance rules relating to the taxation of income and gains accruing to offshore trusts was published on 13 September 2017; we reviewed and commented on the draft suggesting several changes in ICAEW REP 120/17.

Minor changes have been made to the draft legislation including a change to ensure that the onward gift rules can apply if the close family member rule applies, to clarify the position in the year of the settlor’s death and in relation to onward gifts to multiple recipients.

Stamp taxes: financial institution bail-in exemption

In order to benefit creditors when resolving failing financial institutions where shares and/or land are transferred to public bodies or affected creditors the transfers will be exempt from stamp taxes. The measure is intended to simplify and strengthen the process of resolving failing financial institutions.

Stamp taxes: securities deposited with financial institutions

Following the UK’s exit from the EU the 1.5% stamp duty and stamp duty reserve tax charge on the issue of shares into overseas clearance services and depositary receipt systems will not be reintroduced.