19 Jan Autumn Statement Highlights
The Chancellor gave with one hand and took with the other as he delivered his final Autumn statement ahead of 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 £5 billion 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
The biggest headline of the day was of course the stamp duty reform which was implemented immediately. Under the new rules, which got rid of the slab style system and replaced it 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 £3m house will end up paying a whacking £273,750 in stamp duty: £63,750 more than before the change. But it will provide relief to those buying homes under £937,000, with nearly all making savings on their tax bill when they move home. Take a look at the table below to see how much stamp duty you would pay at certain levels.
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 originally planned.
Keeping it in the family
Under previous rules, tax free savings in an ISA 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 when passed to a spouse or civil partner. This applies to both cash and stocks and shares ISAs.
In addition, the ISA limit will be raised to £15,240 in April 2015.
Let’s fly away
And for those with families, a little sweetener came in the form of the scrapping of airline passenger duty for children under 12 from next May, and for children under 16 from March 2016, making family holidays a little cheaper.
Business rates wrangling
And despite not extending business rate relief to small businesses as many hoped for, the Chancellor did promise a business rate review and potential reform in the next parliament – but of course this will depend on who wins the next election!
And 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 £2bna year
- Employment Allowance of £2,000 to be extended to carers
- Government backed loans of up to £10,000 for all students on postgraduate degree courses
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.
All information is correct at date of publication.