This is not an in depth analysis of the Autumn Statement, but it is intended to highlight some of the areas I believe are of particular importance to advisers and to your clients.


Income Tax


As expected, the personal allowance will be increased again next year, but with a compensating decrease in the higher rate tax threshold. The latter will increase in 2014, but only by 1% (which is expected to be below inflation).

The effect of these changes should be to bring more clients into the 40% band.  Advisers should be ready to help these clients with more appropriate investment strategies that take better advantage of tax benefits that are available.

The Treasury has stated that even those taxpayers moving into the higher rate band for the first time should still end up with more cash in their pocket as a result of the tax changes. If so, perhaps those clients can be convinced to part with this additional cash in order to reduce their tax rate back down to 20% again!


Business Taxation


The main rate of corporation tax is going down to 23% from April next year as previously announced.It was expected to go down to 22% in 2014, but will now go down even further to 21%.

The UK is already regarded as an attractive “developed country tax haven”. With 21% giving us the lowest corporation tax rate in the G7 (unless other countries quickly follow suit) this trend is likely to continue. With more foreign companies moving to the UK there are likely to be more non UK domiciled individuals needing good advice from experts in this field. I am reliably informed by AXA Wealth International that in 2010 the number of non UK domiciled individuals who came to live in the UK was around 554,000, which is the size of the population of Bristol, so there is already a huge influx of such individuals. These changes to business taxation can only increase the likely size of this potentially very wealthy market.


The Annual Investment Allowance for plant and machinery will increase from £25,000 to £250,000 through the calendar years 2013 and 2014. This should particularly benefit medium sized companies hoping to expand, who may now find this additional tax benefit makes the investment worthwhile. Growth in a client’s business always presents numerous opportunities for an alert adviser.


Smaller businesses can also find some benefit in the statement. Those occupying premises with a rateable value below £6,000 will continue for a further year to avoid having to pay any business rates. They are currently already enjoying this benefit but were expecting to face rates again from April 2013. Now is the time for experienced corporate advisers to get those businesses to leverage through investment these savings they were not expecting, rather than just allow them to get lost in the general running costs of the business.


Pension Planning


The lifetime allowance will again be lowered (from £1.5 million to £1.25 million), and the annual allowance will go down from £50,000 to £40,000.


For clients with funds unlikely to approach the lifetime allowance there should perhaps be some focus on “buy now while stocks last” with the annual allowance.


Clients who are worried about the lifetime allowance may wish to consider investing in an approved QNUPS. Whilst they will not get tax relief on the money going in, it will grow in a tax favourable environment and face lower effective tax rates on withdrawal.




Most financial advisers probably have little dealing with clients on working benefits. This may be fortunate for the advisers, as such clients will have even less money to invest or to pay for advice, with their benefits due to rise by only 1%, which is significantly below inflation.


Many advisers, though, will have clients who receive one benefit – the basic state pension. This is due to increase by 2.5% next year, which is above inflation. Although this is a small sum, wealthier retired individuals should perhaps be encouraged to use all of this increase to enhance the investments they are already hopefully making.


The increase in the capped drawdown limit from 100% to 120% of an equivalent annuity will also be a welcome change for many pensioners. There are, though, many quite wealthy pensioners out there who do not have a financial adviser and may not be aware of the opportunities available to them. Perhaps now is a good time for advisers to explore this growing market.


Tax Avoidance


The long awaited GAAR will be introduced, just as we expected. The anti-avoidance measures will go well beyond this, though. This makes it even more important for advisers to focus with their clients on mainstream tax planning using the numerous legitimate tools that are out there, and using them in the ways originally intended by parliament.


Tax Evasion


There is a new offshore evasion unit in HMRC. The government is also expanding its efforts to conclude information sharing agreements with a number of other countries, just as it has recently done with Switzerland and the United States. This will make it a lot more difficult for tax evaders sheltering income and gains overseas.


As a result, there are likely to be many potential clients out there who would previously have “forgotten” to declare offshore income or gains and who may now be looking for more legitimate ways to shelter their wealth from tax.


Insurance companies are now putting more emphasis on offshore bonds and some are making the charges a lot more attractive than they used to be. All these factors could make the market for advice to offshore investors a lot more attractive than it once was.


HMRC Affluent Unit


The statement mentions extending the remit for the HMRC Affluent Unit from £2.5 million to £1 million net assets. This had already been announced some time ago but it is still quite a worrying development for our slightly more affluent clients.


£1 million net worth is no longer a particularly high figure, so many of our clients may now come under the scrutiny of this unit. Hopefully none of them have ever evaded tax, so it could be argued that they have nothing to worry about. But the costs to clients in both time and money of dealing with an HMRC investigation can be very high even though the end result of the investigation is a clean pass.


I hope you have found this information a helpful reminder of some of the key issues you may wish to address, both in your discussions with clients and in your focus on where and how to market your services.