Autumn Statement 2014: winners and losers
George Osborne hasn't got a huge amount of cash sitting around in his coffers at present, but he managed to dig deep to surprise certain sections of the population in his Autumn Statement. But there were also some groups of people who may well be miffed at some of his announcements.
Here's our rundown of who benefited the most from the 2014 Autumn Statement – and who lost out.
The Chancellor's reforms to stamp duty on property will result in 98% of buyers paying less in the tax than they would have under the old system. Someone buying a home for £275,000 will now pay stamp duty of £3,750 rather than the £8,250 they had to pay under the old system – saving them £4,500.
It's not much of a boost, but the income tax personal allowance will rise to £10,600 in April rather than the £10,500 that had been planned for next year.
The higher rate income tax threshold will rise to £42,385 next year, meaning those who earn more will receive a tiny boost in their pay packets.
From April 2015 savers will be able to invest a total of £15,240 a year in their Individual Savings Account (Isa) – up from £15,000. Plus Osborne said that – with immediate effect – people will be able pass on their Isas to their spouse free of tax when they die.
From 1 May 2015, children under 12 will no longer have to pay Air Passenger Duty, with the charge also being abolished for under-16s in May 2016. This could save a family of four well over £100 if flying to the US.
The government has frozen fuel duty once again, meaning drivers will not face a sudden increase in petrol prices at the pumps.
Aid workers who die in service will be exempt from inheritance tax, bringing them in line with members of the Armed Forces.
High-end property buyers
People buying hugely expensive homes will pay more in Stamp Duty following reforms to the property tax. Under the old system, the top rate of Stamp Duty was 7% (on homes over £2 million) whereas the new tax hits 12% for homes over £1.5 million.
Factoring in changes to the bandings, it is estimated that anyone buying a home of over £937,000 will pay more in Stamp Duty.
Families on benefits
The Chancellor announced more cuts to benefits, with Universal Credit Work allowances frozen for a year.
Osborne said immigrants who have no prospect of work will no longer receive unemployment benefits.
People who are non-domiciled in the UK already face an annual charge of £30,000 – but those that have been here for 12 of the last 14 years will pay £60,000 a year, rising to £90,000 if they have been here for 15 of the last 17 years.
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
The tax levied on the total value of your estate after you die. IHT has to be paid by the beneficiaries of your estate before they can receive any of the money from it. The money can’t be taken from the value of the estate _– it has to be paid before any money can be released. There is an IHT threshold – known as the “nil-rate band” – below which no tax is levied (£325,000 in 2011/12). Any amount above the nil-rate band is subject to tax at 40%. If your estate totals £600,000, there is no tax on the first £325,000; however your estate will pay 40% tax on the remaining £275,000, a total of £110,000. Prudent tax planning can reduce your IHT liability, so always consult a specialist solicitor.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.