08 December 2016 #Private Client
The chancellor delivered his first and last autumn statement on the 23rd November. Following the major changes announced to Inheritance Tax earlier in the year, this statement was quite light on material from a private client perspective.
Some had hoped that the chancellor would review the stamp duty position, particularly the additional 3% charge introduced in April for those buying second properties - which many view as unfair. The chancellor however made no reference to this.
The government did however confirm its commitment to increase the income tax personal allowance to £12,500 and the higher rate threshold (the sum of the personal allowance and the basic rate limit) to £50,000 by 2020-21, although quite when this will be enacted is unclear. In 2017 to 2018, the personal allowance will rise to £11,500 and the higher rate threshold to £45,000. Two new allowances are also being introduced that will exempt from tax the first £1,000 of an individual’s trading and property incomes. The annual ISA allowance will also be increased from £15,240 to £20,000 on 6 April 2017.
April 2017 also sees the introduction of the Residence Nil Rate Band, significantly increasing the inheritance tax allowance for those leaving their residence to children or remoter descendants. We highly recommend that those with estates exceeding the current inheritance tax threshold (£325,000 for individuals or £650,000 for married couples) consider reviewing their Wills if they own a residence and have children, grandchildren or remoter descendants to ensure this valuable relief is not wasted.
Finally, With Christmas fast approaching, many families will be meeting with each other over the festive period. Although discussing Wills and Powers of Attorney are unlikely to be a popular topic of conversation over the dinner table, some families may wish to use the quieter periods between Christmas and the New Year to discuss their personal affairs with their family members. In particular, those making Lasting Powers of Attorney, which need to be signed by all family members who are being appointed as attorneys, may wish to arrange for these documents to be signed whilst everyone is together - certainly if any of the attorneys do not live locally and are travelling to visit their families over the festive period.
As always, please don’t hesitate to contact a member of our Private Client team if you have any queries or require any additional information about any of the points raised in this article.
Season’s greetings to you and your families.