Autumn Statement 2014 highlights
autumn.jpg

1. Stamp duty cut for most house buyers

The rabbit pulled out of the Chancellor's hat was stamp duty! This tax paid on property purchases will be cut for 98% of people who pay it - only the highest-value residential properties will pay more.

Under the old rules, you would have paid Stamp Duty Land Tax at a single rate on the entire property price. Now, you will only pay the rate of tax on the part of the property price within each tax band – like income tax.

Under the old rules, if you bought a house for £185,000, you would have had to pay 1% tax on the full amount – a total of £1,850. Under the new rules you don’t start paying tax until the property price goes over £125,000, and then you only pay tax on the price of the property within the tax bands over that price.

Under the new rules, you’ll pay nothing on £125,000 and 2% on the remaining £60,000. This works out as £1,200, a saving of £650.

The changes are effective from midnight tonight. Anyone who has exchanged contracts but not completed will be able to choose to pay under the new or old system. Find out more here.

2. Personal allowance increase

The personal allowance – the amount you earn before you have to start paying income tax – will be increased from £10,000 to £10,600 in 2015 to 2016.

Typically, someone earning between £10,600 and £42,385 will be £825 better off by 2015-16 as a result of increases in the tax-free personal allowance since 2010, says the Chancellor.

3. Children will be exempt from tax on economy flights

This will apply for under 12s on flights from 1 May 2015, and for under 16s from 1 March 2016 – saving an average family of four £26 on a flight to Europe and £142 on one to the US.  Some airlines have said they will refund those who have already paid for tickets for travel for May and beyond.

The government will consult on making sure that the tax is displayed on ticket prices.

4. Spouses will inherit their partner’s individual saving account (ISA) benefits after death

Currently, if someone passes away they can’t pass on their ISA to their spouse, even if they have saved the money together. So this means around 150,000 people a year lose out on the tax advantages of their partner’s ISA when their partner passes away.

From 3 December 2014, if an ISA holder dies, they will be able to pass on their ISA benefits to their spouse or civil partner via an additional ISA allowance which they will be able to use from 6 April 2015.

The surviving spouse or civil partner will be allowed to invest as much into their own ISA as their spouse used to have, in addition to their normal annual ISA limit.

From April 2015, the annual ISA limit will increase to £15,240.

Julie Hutchison at Standard Life commented: "2014 has seen a positive new direction set for savers, when it comes to how savings can be passed on to loved ones from 6th April 2015. Today’s ISA news means that married couples and civil partners will get continuity of tax treatment, when it comes to an ISA allowance inherited from their spouse or civil partner, and we await the Finance Bill for more details."

Read 5 reasons to have an ISA here.

5. Extra £2 billion for frontline NHS services

The government is providing £2 billion of additional funding for frontline NHS services in England in 2015-16. This is part of a multi-year £3.1 billion UK-wide investment in the NHS.

In England, at least £15 million will go to research in dementia, £150 million over five years will be invested to support young people with eating disorders. £200 million will go to develop new ways of caring for patients. £1.5 billion will go to local NHS services next year.

6. Pension inheritance changes confirmed

The Chancellor confirmed the 55% death tax which currently applies when you pass unused pension pot onto loved ones will be abolished. People will be able to pass on their pensions tax free from April 2015. Also, people who die before the age of 75 with a joint life or guaranteed-term annuity can pass that on tax-free, too.

Julie Hutchison at Standard Life said: "The announcement about inherited annuity income is also welcome, which means from 6th April next year, ongoing annuity income will be paid tax-free to your spouse or civil partner, if you die before age 75 and had originally bought a joint life annuity. We know many of our customers review and plan their finances at a household rather than individual level, so these announcements are great news. 

"Taken together with the new flexible rules for pensions coming next year, including the way they can be cascaded down the generations in future- this is great news for savers. The framework to resurrect a savings culture is taking shape,” she adds.

7. Travel and infrastructure announcements

  • Fuel duty - to remain frozen
  • Roads - plans to spend £15bn on 84 roads outlined
  • Flood - schemes to protect 300,000 homes

Nilesh Shah, head of tax at London Chartered Accountands Blick Rothenberg LLP commented: “The Autumn Statement is becoming more like a budget announcement. You wouldn’t think an election was round the corner!”

Read the Chancellor’s Autumn Statement speech in full here.