Autumn Statement 2014- what's in it for you?
So the Chancellor gave us his Autumn Statement yesterday, updating us on the sorry state of the economy, while adding enough sweeteners to make us feel like it’s not all so bad. We made our predictions earlier in the week, and we’re feeling pretty smug. Here are the highlights of Autumn Statement 2014:
Under the previously existing system, stamp duty is calculated as a percentage of the whole property price – but this goes up in sharp steps at specified points, rather than being a smooth curve upwards. The rates were 1% for properties bought for more than £125,000, 3% for homes bought for more than £250,000, 4% at over £500,000, 5% at over £1m, and 7% at over £2m.
As explained in our predictions for the Autumn Statement, this system means that the difference in Stamp Duty between buying a property for £249,999 and paying £250,001 would be a massive £5,000 – up from £2,500 to £7,500.
The new system, announced by the Chancellor yesterday and taking effect from midnight on 4th December, smooths out those steps and fiddles with the rates as follows:
No stamp duty will be paid on the first £125,000 of a property
2% will be paid on the portion up to £250,000
5% is paid for the portion up to £925,000
10% is paid on the portion up to £1.5m
12% is paid on anything above that
This means that anyone buying a property for less than £937,500 will be better off, which works out at approximately 98% of house sales. However, if you are in the process of buying a property, and exchanged contracts before 4th December, you can choose whether to use the old or new rules, and HMRC have produced a handy calculator to help you see which is the most expensive option. The average family home buyer in the UK (at £275,000) will save £4,500 under the new rules.
Of course, it’s a fool’s errand to try and please all of the people all of the time, and in addition to the 2% of seriously expensive property buyers, there are a great many disgruntled buyers out there. All those who completed on a property in the last week/fortnight/month who are now feeling considerably out of pocket and decidedly hard done by.
Personal Tax Rates and Allowances
We predicted there would be no change to the previously announced figures of £10,500 personal allowance and £42,285 higher rate starting point from 6 April 2015. We were almost right, the rates have been changed, but only by a token £100 each. Still something is better than nothing, and basic rate taxpayers will now pocket an extra £20 on top from next April.
A few things have been announced surrounding inheritances. Firstly inheritance tax will be cut for families of aid workers who die in course of their work. Which seems pretty decent.
Also, ISAs can now be passed on to spouses tax-free. Previously an ISA would lose all its tax benefits on the death of the holder, but now they can be inherited as a tax-free vehicle. The investment limit for ISAs is also set to go up from the recently-inflated £15,000 to £15,240 in April 2015.
And, after all the speculation and fiddling with annuities, confirmation that the current 55% death tax on pensions pots that are passed on to loved ones will be abolished for those dying before the age of 75.
Alongside an anticipated freeze in fuel duty, Air Passenger Duty will be scrapped for under-12s from 1 May next year and for under-16s the following year. This might go some way to easing those currently having kittens over the proposed scrapping of APD entirely in Scotland once those tax powers are devolved to Holyrood, along with groundbreaking ability to do what it likes with Scottish income tax rates (but not allowances). Northern Ireland is to (potentially) get autonomy over its corporate tax rates and Wales will be able to set their own business rates.
New anti-avoidance measures include a £90,000 charge for non-doms resident in the UK for 17 of the past 20 years, and a new 25% tax charge on multinational companies shifting profits out of the UK, which is predicted to be a big earner. But then the Chancellor probably would say that.
Finally, postgraduate loans of up to £10,000 will be available to Masters students, but only if they are under 30. If you are older than 30 you should clearly Get A Job.
So what do you think of the Chancellor’s early Christmas presents? Are you filled with the joys of Christmas or muttering Bah Humbug into your solitary mince pie?