The Chancellor's Autumn Statement next Thursday 5 December could bring bad news for savers. For starters rumours have been swirling that a cap on the lifetime amount that can be invested in ISAs may be announced. Meanwhile the Government is considering cutting the amount that can be withdrawn as a tax-free lump sum from a pension on retirement.
At present those retiring can take up to 25 per cent of their pension pot as a cash lump sum and pay no tax on it.
When the Government is looking to increase its tax take, that's a giveaway that is easy to cut. But if they do so, it would be a blow to anyone who has already made plans based on the amount they can get.
John Fletcher, director of financial planning at Brewin Dolphin, said: "The worst thing the Chancellor could do is restrict pension savings further. The public is already losing trust in pensions and any restriction on the 25 per cent lump sum would limit the attractions of saving."
Auto-enrolment is making a difference with pensions on the increase for the first time in years, pointed out Andy James, head of retirement planning at Towry, so the Chancellor should resist the temptation to fiddle further. "My plea to Mr Osborne is to leave things alone and let the changes bed in, nothing puts people off doing something more than uncertainty."
Jason Hollands, managing director at Bestinvest, agrees. "Continual reductions in the pension allowance leave the impression the system is in flux. Investors now need to be reassured that the goal posts won't keep moving."
He says the same certainty should surround ISAs. "Repeated calls to meddle with long-term investment allowances is having a deeply debilitating impact on people's willingness to save."
Dominic O'Connell, head of tax at Coutts, also warned against any tinkering with ISA limits. "Such measures could damage public confidence in both the UK's tax system and savings mechanisms."
However, experts predict there could be good news for first-time buyers in the Autumn Statement with another Stamp Duty holiday for properties valued between £125,000 and £250,000.
However Richard Godmon, partner at Menzies, would like the Chancellor to go further. "Osborne should abolish Stamp Duty for properties under £500,000 as this is a tax on mobility and freedom of movement."Reuse content