04 Dec Money Matters – Autumn Statement Report
I’m delighted to bring to you for the second year running our Money Matters – Autumn Statement Report 2014 which outlines how the announcements might affect your financial planning.
The Chancellor gave with one hand and took with the other as he delivered his final Autumn statement before next year’s election. With the opinion polls neck and neck, Mr Osborne was forced to admit he had missed his annual borrowing target by £5billion and despite five years of belt-tightening the UK’s debt continues to rise. Frugal as ever, he warned that austerity still has at least four more years to run. All this against an announcement from the Office for Budget Responsibility that real earnings will not return to pre-recession levels for at least five years.
But with the election drawing ever nearer, it wasn’t all doom and gloom. The Chancellor reported “higher growth, lower unemployment, falling inflation and a deficit that is falling too.” So how much of this statement was electioneering and what does it all mean for you?
STAMPING OUT THE SLAB SYSTEM…
Mr Osborne grabbed the headline with stamp duty reform, which will be implemented immediately. Under the new rules, which replaced the old “slab system” and with a progressive system similar to income tax, many homebuyers will end up paying less tax. However, further tiers were introduced at the top end of the market, meaning that those buying a £3 million house will end up with a hefty £273,750 whack of stamp duty a total of £63,750 more than before the change. But HMRC will provide relief to those buying homes under £937,000, with nearly all making savings on their tax bill when they move.
As expected, the Chancellor let us know his plans for tax thresholds from April 2015. Higher rate tax-payers will be pleased that the threshold for the 40% tax band will be raised to £42,385 from April 2015 – £100 higher than expected. And for basic rate tax-payers, the personal tax free allowance will go up to £10,600 – again, £100 higher than expected.
KEEPING IT IN THE FAMILY…
Under previous rules, savings in ISAs lost their tax-free status on the death of the account holder, and the person inheriting the savings had to start paying tax on the savings immediately. Under new rules, the savings in an ISA retain their tax free status on death – another reform in the Chancellor’s favourite area of “death taxes”.
For those still in the land of the living, the ISA limit will be raised to £15,240 in April 2015, allowing prudent savers to squirrel away more tax-free savings.
LET’S FLY AWAY…
There was a little sweetener for families heading abroad in the form of airline passenger duty for children under 12, which will be scrapped from next May, and for children under 16 from March 2016.
BUSINESS RATES WRANGLING…
And despite not extending business rate relief to small businesses as many had hoped for, the Chancellor did promise a business rate review and potential reform in the next parliament. A nice little incentive come next year’s election!
Best of the rest…
- “Google Tax” – 25% levy on multi-nationals who divert profits overseas;
- National Insurance on young apprentices to be abolished;
- Foreign exchange rigging fines to be diverted to the NHS – an extra £2 billion a year;
- Employment Allowance of £2,000 to be extended to carers; and
- Government backed loans of up to £10,000 for all students on post graduate degree courses.
I do hope you enjoy our report.
Thank you again for choosing Wren Sterling.
Wren Sterling Group
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This article is for information only and does not constitute advice. Please obtain professional advice before making financial decisions. Please note that we are not tax advisers – please speak to your tax adviser for further information on tax liabilities.
PHOTO: Creative Commons Flickr/altogetherfool