Irwin Mitchell Experts Share Their Views
Chancellor Jeremy Hunt delivered his Autumn Statement on Thursday 17 November 2022 setting out the Government’s tax and spending plans.
Our experts share their views and explain how some of the announcements may affect you:
Ed Tomlinson, Head of Financial Planning at Irwin Mitchell said:
“Although the Chancellor hasn’t made any changes to the tax rates in his Autumn Statement, those hoping for, or expecting inflation pay rises to give them more in their pocket, will be disappointed if their pay rise has pushed them into the higher and additional rate tax bands, which are frozen until 2028.
“This means a bigger slice of their pay increase is gobbled up in tax. As more people are dragged into the higher and additional rate tax brackets, we could see those with earned income make use of their, albeit frozen, pensions allowance to reduce their tax bill and keep themselves in a lower rate tax bracket.”
Naomi Neville, Lifestyle and Estates Planning Partner at Irwin Mitchell said:
“With more people squeezed financially, we are likely to see a rise in ‘giving while living’ - lifetime gifting to loved ones, particularly to adult children who are struggling to get by in the cost of living crisis.
“The extended freeze on thresholds means people will need to seek advice more than ever to protect their wealth and ensure it is passed on how they would like, without being caught by unforeseen taxes in the future.”
Dilnot Reform Delays
Stewart Stretton-Hill, a specialist lifestyle and estates planning lawyer said:
“The further delay to implement the watered-down version of the Dilnot reforms means that individuals receiving care will still need to pay fully for that care until their capital assets fall to £23,250 at which point the Local Authority will start to provide some financial assistance. The proposed cap on care costs has been pushed further down the line which means there is no limit to the amount individuals may have to pay for their care.
“With the squeeze on the public purse this means that careful planning remains crucial to help make the most of opportunities for maximising choice and minimising the impact of care costs. Families should seek advice as early as possible to ensure they receive the level of care they want and deserve.”
Jeremy Raj, National Head of Residential Property at Irwin Mitchell comments on the following topics:
“It appears that once again the Chancellor of the day has been unable to resist tinkering with SDLT. However, there will be relief within the industry and for many buyers that all he has done is to stretch out the September ‘cuts’ until the end of March 2025, and there is nothing new or more complex to contend with.
“The industry will this time round be much more focused on how the markets react, and – ultimately – whether the cranking up of interest rates will continue apace. Frankly, given the ups and downs of recent times, many will question this Government’s ability to say what will be happening in March 2023, let alone in 2025, but there will be some sighs of relief from those currently mid-transaction that they will still be paying what they expected in SDLT.”
ATED (Annual Tax on Enveloped Dwellings)
“The hefty increase of 10.1% for the 2023-24 charging period was of course a choice, and represents a continuation of the Government’s antipathy towards corporate structures and landlords in general. Coupled with the new (returning) Secretary of State’s pronouncements regarding housebuilders, it seems that the industry continues to find itself out of favour at a time when it’s energy and enthusiasm is most needed. This is a dangerous path to continue down when we desperately need to build more, facilitate all tenures and ensure funds are available for the proper greening of our housing stock.”
“Freeing Councils to increase rates by 3%, with an additional 2% social care precept from next April, will bring much-needed additional revenue to cash-strapped Local Authorities. It will though come with its own pain points, particularly for the asset-rich/low income sector of homeowners – frequently the elderly, who despite the Cost of Living payments will still be struggling with generally increased costs.
“The lack of suitable alternative accommodation for such homeowners has long been a deterrent for them to move from the housing stock they occupy and it will be interesting to see whether these rises translate into additional movement in the market. It is also to be strongly hoped that Council Tax banding will not prove to be the outdated blunt instrument it has been in recent years.
“Councils will need to take care not to tip struggling families and others into further financial hardship in these difficult times. Unfortunately the market remains slow and cumbersome for a variety of reasons, so the ability to downsize to avoid such tax increases or free up equity – and bedrooms - is limited.”