Main tax talking points of todays Autumn Statement. If you are closing a house sale, wait until tomorrow!
Greater than expected increase of Personal Allowance to £10,600. Increase in the higher rate threshold. Major reduction and reform of Stamp Duty. If you are closing on a house sale today, you should read this first!
The main features of today's Autumn Statement with regards to tax/ PAYE were:
- Today's Autumn Statement saw George Osborne announce major changes to Stamp Duty. The residential Slab System is gone, to be replaced by a new graduated stamp duty system, increasing in amount
from 0% to 7.9% as the value of the property increases. For property's under
£125,000, there is no stamp duty payable on the sale. On property's valued over £125,000, it's 2% of however much they are over that £125,000; and so on. 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. Stamp duty will be
cut for 98% of people who pay it. Basically, if you are buying a home for less
than £937,500, you will pay less stamp duty after midnight tonight. Full breakdown of rates and bands here.
- In PAYE there was a welcome added increase to the Personal Allowance for 2014/15. We knew from last year that this was due to rise to £10,500 from next April. But there was an
extra bump of £100 thrown in today, meaning from next April you can earn
£10,600 tax free.
- Another PAYE change is the first increase to the Higher Rate Threshold in 5 years. This increases from £41,865 to £42,385 from next April. So, you can earn up to
£42,385 before crossing into 40% tax territory. (This figure includes your personal tax free
allowance of £10,600)
- Children will be exempt from paying 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.
- Spouses will be able to inherit their partner's ISA account benefit after death. 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.
- Business rates: The existing High Street Discount will go up from £1,000 to £1,500, from April 2015. The Small Business Rate Relief will be doubled. The 2% cap on the annual increase in
business rates will continue for the next tax year. Finally, there will be an extension of
the transitional rate relief for smaller properties.
- No more employer NIC's on apprentices under 25 years of age. It had been previously been announced that no employers NIC's would be due on apprentices under 21 years old from April 2015. This has been
further extended today to include all but the highest earning apprentices aged under
25 years old.
- Student Loans From 2016-17, income-contingent loans of up to £10,000, will now be available to those under 30's, who want to pursue Post Graduate and taught Masters courses.
This article was published in our News section on 03/12/2014.
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