to help you make informed decisions about your wealth
Archived article
quill and ink well

Sense and sensibility

25 November 2016

The chancellor revealed a ‘safety first’ approach in the face of a weaker outlook for the UK economy.

The chancellor, Philip Hammond, delivered his first Autumn Statement on Wednesday – which also turned out to be his last. After two Budgets in 2017, from 2018 onwards we will have a Spring Statement and an autumn Budget.

In a speech that ranged from the usual raft of anti-avoidance provisions to the insurance premium tax, by way of ensuring national ownership of Wentworth Woodhouse – a historic stately home said to be the inspiration for Jane Austen’s Pemberley, Mr Hammond mixed in the serious challenges with some quirky touches.

Those serious challenges included the need to tackle the long-term weaknesses of the UK economy, maintaining a commitment to fiscal discipline, accepting that GDP and wage growth will be lower than previously forecast, and accepting that government borrowing will be significantly higher than previously projected.

Despite commentators claiming that Hammond’s Autumn Statement was a sombre affair, there were crumbs of comfort for those in need of cheer. For instance, the chancellor confirmed the commitment to raise the level at which Income Tax begins to be paid to £11,500 and the threshold for higher rate tax to £45,000 – both from April 2017. This will provide a modest rise in income for middle and high earners, but, alas, doesn’t help the poorest.

Addressing the Commons, he said: “Mr Speaker, I said that the tax system must be fair and that means rewarding those who work hard by helping them to keep more of what they earn. There is one tax reform the government have pursued since 2010 that has done more than any other to improve the lot of working people: raising the tax-free personal allowance.”

He claimed that changes over the years had meant four million people had been taken out of paying Income Tax.

Mr Hammond also reaffirmed the government’s pledge to raise the lowest tax threshold to £12,500, and the higher rate threshold to £50,000, by the end of the Parliament in 2020/21. The personal allowance will then rise automatically during the 2020s in line with inflation, rather than the National Minimum Wage as previously planned.

“The chancellor had already stated his belief that the Autumn Statement was not the place for large- scale tax changes, but the scope for him to pull a rabbit out of the hat was dampened by the downgraded economic forecasts,” says Ian Price, Divisional Director at St. James’s Place. “Although the changes to Income Tax thresholds will mean that many hard-working families will have a little more cash in their pockets, rising inflation next year is expected to put a squeeze on purchasing power, while wage growth will continue to stagnate.”

Despite this, the changes to Income Tax thresholds mean that those drawing from pensions will pay less tax on withdrawals taken after their tax-free lump sum entitlement.

“A retired couple could take an income of £23,000 in the 2017/18 tax year and pay no tax at all,” says Price. “That figure will rise to £25,000 in 2020/21.”

The chancellor also confirmed that the Junior ISA and Child Trust Fund limits will rise to £4,128 for 2017/18 and the ISA limit will rise to £20,000 at the same time. This broadens the opportunity to shelter savings from further tax on income and capital gains for those with the available funds, both for their benefit and, potentially, for the benefit of their wider family.

On the flip side, millions who enjoy tax perks on goods and services arranged through their employer, such as gym membership, and health screening, could be worse off. Mr Hammond announced the removal of tax and NIC advantages on perks from salary sacrifice arrangements (excluding pension contributions) claiming that these schemes are “unfair”.

He also confirmed that, despite the fiscal pressures, the government will meet its commitments to maintain higher-than-inflation rises to the State Pension until 2020.


The value of an ISA or Junior ISA with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise.  

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.


We value your opinion

We are always looking for ways to improve our service, so if there is something you think we could do better, or that you think we are doing really well, we would love to hear from you.

The only thing we ask is that you do not include any personal information, like account numbers, in your email. If your matter is urgent, needing our personal attention, please contact your local office.

You may be contacted to follow up on your comments.


If you wish to complain about any aspect of our service, we will do what we can not only to meet, but exceed your expectations of a swift and thorough resolution. More details of our complaints procedure can be found here.