This afternoon the Chancellor of the Exchequer stood up in the House of Commons to deliver his Autumn Statement. Here’s the headlines and what they mean.

FUEL
The 3p-a-litre increase in fuel duty, planned for next January, is cancelled. This will be a welcome move for all businesses and private motorists.

ECONOMIC GROWTH
Predicted to be -0.1% in 2012, down from 0.8% predicted in the Budget Earlier in 2012. Forecasts for the next few years are: 1.2% in 2013, 2% in 2014, 2.3% 2015, 2.7% in 2016 and 2.8% in 2017.

BENEFITS AND PENSIONS
From 2014-15 lifetime pension relief allowance to fall from £1.5m to £1.25m. This is a significant move for many pension savers and will mean many more people will be subject to a lifetime allowance charge when they come to take their benefits. As a result of the introduction of this Personal Protection Regime (details yet to be announced) there will now be four types of protection with PPR sitting along side Primary, Enhanced and Fixed protection. Pension simplification in 2006 seems like a long time ago.

Pension annual allowance has also been cut from £50,000 per annum to £40,000 per annum. This reduction is much less significant than the lifetime allowance reduction but will adversely affect those with a pension funding strategy in excess of £40,000. It’s also worth noting that this will have an impact on the tax relief available on such contributions too.

Basic state pension to rise by 2.5% next year to £110.15 a week.

TAXES AND ALLOWANCES
Basic income tax threshold to be raised by £235 more than previously announced next year, to £9,440 in 2013/14. Threshold for 40% rate of income tax to rise by 1% in 2014 and 2015, from £41,450 to £41,865 and then £42,285.

Main rate of corporation tax to be cut by extra 1% to 21% from April 2014.
Inheritance tax threshold to be increased by 1% next year
ISA contribution limit to be raised to £11,520 from next April

COMMENT
ISA funding assumes ever greater importance in the realm of retirement planning:

• Increasing annual allowances
• No lifetime allowance limits
• Tax free income
• Withdrawals in excess of 25%

However there’s no tax relief on contributions going in. This budget re-enforces our belief that both pensions and ISAs should be blended for the optimal retirement income solution.