The LTA, essentially a stealth tax on investment success, has been progressively whittled away to boost the Treasury coffers since it was introduced in 2006 by the then chancellor Gordon Brown. But last year, when the LTA stood at £1 million, it was announced it would from now on be increased each year in line with inflation. Therefore, today’s announcement does not come as a surprise.
Autumn Budget 2018: What it means for you
The Individual Savings Account (Isa) limits will remain unchanged at £20,000. The allowance has never been more generous with plenty of options, as savers and investors can now select one of seven different Isa types.
The Junior Isa limit will rise in line with CPI inflation to £4,368. This same limit will apply to Child Trust Funds (CTFs). In addition, it was announced the government will publish a consultation next year on draft regulations for maturing CTF accounts.
It is no surprise to anyone that the ISA has gone without a change in this year’s budget. Two years ago the allowance stood at £15,240, before being raised to £20,000 in April 2017. The increase surpasses rises in inflation since the Isa was introduced in 1999, when the allowance stood at £7,000.
Making big changes with small adjustments
Although it was a quiet day on the pensions front the rise in the higher rate tax threshold, from £46,350 to £50,000 next April, will result previously higher-rate taxpayers slipping into the basic rate tax bracket.
As a consequence, the tax relief they receive when putting money into a pension will be halved from 40% to 20%.