We listened to the Autumn Statement to find out if any of its announcements could affect our members. The Autumn Statement takes place each year and it delivers the economic forecasts and projections, provided by the Office of Budget Responsibility. The speech is given by the Chancellor of the Exchequer and announces taxation and spending plans the UK government have decided on for the next year, and often further into the future.
The Autumn Statement has now been announced, and along with it has have come changes in the finance world. Some of these may benefit you greatly. Other points might not, but it’s always handy to know what’s included in the Autumn Statement. Below we have covered some of the main points that the Chancellor announced, and how they may affect you.
New ISA rules
The ISA threshold has increased from £15,000 to £15,240. This means that from 6th April 2015, you will be able to save up to £15,240 a year- completely tax efficiently – with our adult ISA plan
New measures have also announced that when someone dies, their husband or wife will be able to re-invest the whole value of his/her spouses ISA into their own ISA as a concession. These new rules are all good news for savers, as they mean you can save more money each year, and you now have more control over what happens to your savings if you pass away.
The statement revealed that where a joint life pension is purchased, if a one spouse passes away ,the continuing payments to the surviving spouse will be made tax free. If the spouse wishes to take a lump sum, this will be subject to tax at the individual’s marginal rate – i.e. 20% or 40%.
If death occurs after the age of 75, there will still be some tax to pay but this will be at the same ‘marginal’ rate instead of the current 45%.
The personal tax allowance will be raised to £10,600 next year, and the higher rate tax band will be raised to £42,385.
The inheritance tax exemption will cover aid workers who lose their lives dealing with humanitarian emergencies.
Growth forecasts for 2014 are up from March to 3%. This means economic growth this year was higher than expected, which is good for the economy.
The Chancellor believes the economy will then grow by 2.4% next year, 2.2% in 2016, 2.4% in 2017 and 2.3% in 2018 and 2019. Inflation is predicted to be 1.5% this year, 1.2% next year, and 1.7% the year after. Only in 2018 will the Bank of England hit its overall target of 2% inflation.
The Chancellor announced that the deficit will fall from £97.5bn in 2013-14 to £91.3bn this year. He also projected it would then fall to £75.9bn, £40.9bn, and £14.5bn in the subsequent three years.
This was the biggest, and possibly most well received, change by the Chancellor in the Autumn Statement. The current system, where the amount of tax to be paid was dictated by the actual purchase price of the property , has been replaced by a graduated rate, working in a similar way to income tax. Experts have called this “The Tories version of the Mansion Tax”.
Under the new rules, no tax will be paid on the first £125,000 of a property, followed by 2% on the amount between £150001 and £250,000, 5% on the portion between £250,001 and £925,000, 10% on the next part up to £1.5 million and 12% on everything above that level.
It seems only time will tell whether the announcements made in the Autumn Statement will be beneficial to the UK, and if the projections the Chancellor has made are able to be kept. Visit our website for all the latest news on the economy, as well and the financial matters that really made a difference to you.
If you have any questions, or are wondering about how the changes may effect your plan, please call our friendly customer services team on 0800 526 249 and they will be happy to help.