NFU Mutual has picked four things for rural businesses and families to watch out for in Jeremy Hunt’s Autumn Statement on 22 November.
With an eye on next year's election, the Chancellor will be eager to announce measures that resonate with voters, the rural insurer says.
Inheritance tax is one of the country’s most unpopular taxes and is likely to be in the government's crosshairs this autumn.
“It’s highly likely a review of inheritance tax will be trailed ahead of a potential cut to the 40% rate in spring," says Sean McCann, chartered financial planner at NFU Mutual.
"Mr Hunt may also announce an increase in the £325,000 tax-free allowance which hasn’t changed since 2009.
“This will appeal equally to older voters and those in line to benefit from an inheritance.”
Mr Hunt will also want to appeal to families, and one way to do that is to announce a reform of the overly complex and controversial high income child benefit tax charge.
The £50,000 income threshold when someone becomes liable for the tax hasn’t changed since it was first introduced more than a decade ago.
Mr McCann explains: “Recent wage growth means more and more families are being caught in the net.
“Child benefit tax kicks in when income exceeds £50,000, but the high rates of inflation we’ve seen in recent years means this threshold is no longer fit for purpose. Had it increased with CPI it would now be nearly £67,000.
“Jeremy Hunt has frozen Income Tax thresholds until 2028, meaning a parent reaching an income of £50,270 or more will find themselves paying both the Child Benefit Tax and 40% Income tax.
"Child benefit tax is the scourge of middle-income families, and a long overdue increase to the £50,000 threshold could be positioned as supporting hard-working families.”
The many changes to ISAs by multiple Chancellors has resulted in a complex landscape of six different options available to investors, each with their own rules.
Allowing both cash and stocks and shares to be held in one ISA would be a welcome simplification, according to NFU Mutual, making it easier for savers and investors.
“Cash ISAs are the most popular type of ISA," Mr McCann says, "While it’s important to have a cash buffer, many keep too much in cash over the longer term, missing out on the growth potential of stocks and shares.
“Allowing savers to switch more easily between cash and share based funds within the same ISA would make it easier for investors to access a wider range of investment choices."
Increasing the £20,000 ISA allowance – which hasn’t changed since 2017 - would likely be a welcome boost for savers and investors.
With income tax thresholds frozen, and higher interest rates, many savers and investors are paying more tax on their returns.
Mr McCann says: "Increasing the ISA allowance would allow people to shield more of their savings and investments from Income and Capital gains tax, helping to mitigate the impacts of inflation.”
Since the surprise announcement in the Spring Budget, abolishing the pension lifetime allowance from April 2024, there have been unanswered questions about some of the practicalities.
These include the limits on tax free cash, which is currently calculated using the individual’s remaining lifetime allowance.
“In the absence of the lifetime allowance, it isn’t clear how any previous tax-free cash payments will be accounted for," Mr McCann says.
“Hopefully there will be more detail from the Chancellor giving much-needed clarity to both pension investors and pension providers and allowing them to plan effectively.”
Last month, the NFU wrote to the Chancellor outlining its key asks ahead of the Autumn Statement, warning that there are 'pressure points' on farming businesses.
In the letter, the union said the need for stability and certainty was “fundamental to enabling long-term business investment decisions”.