In the first Budget to take place on a Monday since 1962, Philip Hammond announced an end to the era of austerity, increased funding for the NHS and – due to some unexpected fiscal headroom – no major corresponding increases in taxes.

But with uncertainties around Brexit still looming, it remains to be seen whether we will look back on yesterday’s announcement as a genuine turning point, or the calm before the storm.

As is the tendency amongst today’s PR-savvy politicians, many of the Chancellor’s key initiatives had been pre-announced, and so we were looking out for any other surprises, either in the speech, or in the accompanying small print. As it turned out, there was nothing earth shattering, but here is our summary of the more salient points from a financial planning perspective.


Despite the usual rumours and speculation about pension incentives being curtailed, particularly tax relief on contributions, it was actually a very quiet budget in terms of pensions. As expected, however, the lifetime allowance (LTA) will increase in line with CPI from April 2019, rising to £1,055,000.

Of particular interest to our clients in the education sector is that the Budget simultaneously confirmed a reduction in the discount rate for the liabilities of unfunded public service pension schemes, including Teachers’ Pensions, to 2.4% (the main driver for the proposed increase in employer contributions from next year), whilst also indicating that changes will be made from 2019-20 to make pension benefits more generous for members of these schemes.

ISAs & Savings Tax

The adult ISA annual subscription limit for 2019-20 will remain unchanged at £20,000.

The annual subscription limit for Junior ISAs and Child Trust Funds for 2019-20 will be uprated in line with CPI from £4,260 to £4,368.

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.

Income Tax

The tax-free Personal Allowance will rise from £11,850 to £12,500. This rise comes a year earlier than planned.

The Higher Rate Threshold will increase from £46,350 to £50,000 in April 2019 meaning that there will be nearly 1 million fewer higher rate taxpayers than in 2015-16.

These changes will have a positive impact for all taxpayers. For example, a retiree following a phased lump-sum pension income strategy will now be able to withdraw up to £16,666 annually from her pension with no income tax liability. At the other end of the spectrum, higher earners will now retain some personal allowance up to a taxable income level of £125,000 – previously £123,700 – and an additional £3,650 of income will be subject to 20%, rather than 40% income tax.

Capital Gains Tax (CGT)

The annual CGT exemption for 2019-20 will increase from £11,700 to £12,000 for individuals and from £5,850 to £6,000 for trusts.

There will be changes to CGT Private Residence Relief from April 2020. These will restrict the reliefs currently available to people who haven’t lived in their home for the full period of ownership and also to people who have let out their homes.

New qualifying conditions for Entrepreneurs’ Relief were announced. The relief is being restricted from 29 October 2019 so that it is only available if an individual has an interest of 5% or more in both the business’s distributable profits and its net assets. The qualifying ownership period for Entrepreneurs’ Relief will also change for most disposals from 6 April 2019 onwards, increasing from one to two years.

Inheritance Tax (IHT) Rates and Exemptions

The Nil Rate Band will remain frozen at its current level of £325,000 until 2021-22. As announced previously, the Residence Nil Rate Band will rise to £150,000 from April 2019.

A consultation into the tax treatment of trusts was announced again, having first been announced in the 2017 Budget. This consultation is likely to have an impact on some IHT mitigation strategies, however there is still no date for its publication.

Despite some rumours to the contrary, there were no changes to some other IHT exemptions, particularly Business Property Relief.

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