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Tax credits, pensions and savings on Chancellor's agenda

Tax credits, pensions and savings need to be high on Chancellors agenda

ACCA urges Chancellor to put personal finance at the heart of his Autumn Statement

When the Chancellor rises to the dispatch box to give his first Autumn Statement of this parliament, he should implement measures to help savers and the working poor, says ACCA (the Association of Chartered Certified Accountants).

Tax Credits

Chas Roy-Chowdhury, ACCA head of taxation, said: “Despite his defeat in the House of Lords the Chancellor clearly wants to take an axe to the country’s tax credits bill. If he is to meet his own fiscal target he desperately needs the £4bn savings he has estimated this will result in. However, he would be better served by waiting until the new National Living Wage has taken effect.

“The lowest paid in the UK will be given an hourly pay rise to £7.20 per hour, this is likely to squeeze many small businesses and could result in job losses in the short term. Rather than hurt those most likely to be in the firing line by prematurely cutting tax credits it would make more sense to wait until the impact of the new Living Wage is known.”

Pensions

Over the past few budgets Mr Osborne has made significant changes to the rules governing pensions. In some cases these changes have resulted in more freedoms but now is the time to stop tinkering with pension rules.

Chas said: “We’ve seen huge changes in pension rules, but the Chancellor needs to appreciate that these changes have created uncertainty, and more of this will put people off investing in private pension schemes and planning for their retirement. We need a commitment from the Chancellor for no more pension changes for the rest of this parliament.

“This will allow the already announced changes to take effect, the benefits and problems to be fully known. Having a four-year moratorium on pensions will stop the urge to tinker and try and fix problems that might sort themselves out in the fullness of time.”

Tax free savings

To counter some of the restrictions the Chancellor placed on pension savings in his June budget, ACCA would like to see changes to tax free savings.

Chas said: “In June the Chancellor made some quite savage restrictions to pension savings. If he is serious about creating a nation of savers he cannot take away pension provisions without giving a little in other savings areas. ACCA thinks that a significant rise in the ISA limit would offset some of the damage done by not only restricting the yearly allowance but also the lifetime pension limit.”

This was posted in Bdaily's Members' News section by ACCA .