Chancellor Autumn Budget 2014 and how it effects people
It was announced that the UK has the fastest growth in the G7 and the deficit is also expected to fall by half by the end of 2014-15. Fuel duty has also been frozen till the end of current parliament in May 2015.
Stamp Duty: First to be affected by the 2014 Autumn will be UK home buyers. The main change is that the Stamp duty has been changed as of Midnight 3rd December 2014. This is suppose to affect 98% of homeowners in England and Wales. This change will be beneficial to those purchasing a house for £937,000 or less but for anyone paying more than that amount they are likely to pay more in stamp duty. The problem with the previous system was that the boundaries between the stamp duty were very sharp e.g. if someone was to buy a home for £250,000 they would have to pay 1% tax duty which would be £2500 but if the prices was to be even 1p more than the £250,000 cap then you would fall into the 3% tax bracket for houses with a price of over £250,000 and you would need to pay £7500.
The new system allows for someone to pay 0% to stamp duty for the first £125,000 so for example someone who buys a house for £200,000; they will only pay 2% stamp duty on £75,000 remaining, meaning they would pay £1500 instead of the £2000 they would have had to have paid on the previous system. Although the rates have increased in percentage in the higher price cases, the overall charge will still be mostly lower for those paying less than £937,000 on a property. The new system has aimed to smooth out the drastic jumps in the boundaries placed on the stamp duty rates and statistically if buying a home in England or Wales the average person will pay £4500 less in stamp duty. Also for any individual that have exchanged the contracts but it has not been completed, they are allowed to choose which out of the two systems they would like to use.
The old rates:
The new rates:
Savings: The limit for tax free ISA accounts paid in cash/shares is going to increase to £15,240 in April from £15,000 that was announced last July. Previously in the situation of a deceased individual who owns a cash ISA account the spouse of the individual will lose the tax free status of the account when they start paying the tax. However the chancellor has said that with immediate effect the spouse of the deceased will be able to inherit and keep the tax free status of the account.
Overall the news on pensions is good as the government has decided to scrap the pension death tax. This means that individuals will be able to pass on their annuity income tax - free when they die before the age of 75. This is a significant change to the previous legislation as there used to be a charge of 55% when annuity retirement income was passed on and this also means that there is much more room to manoeuvre when people pass on their pension wealth. People will also be allowed to access their pensions as they require from retirement which allows them to not need to arrange an annuity.
Tax free Allowance: The maximum amount you earn before you are required to pay income tax will be increased to £10,600 from £10,000 in April 2015.
Business rates: The high street discount for roughly 300,000 shops, cafes, restaurants and pubs is set to increase in April 2015 to March 2016 by £500 from £1000 to £1500, helping to improve and promote growth amongst the nation's small businesses and local communities.
Small business rate relief has also been doubled for another year which means that 380,000 of the smallest business will pay no rates at all and there has also been stop to 2% of the increase in business rates from April 2015 - March 2016.
NIC'S (National Insurance Contribution): The government is trying to make it cheaper to employ young people from April 2016 by allowing employers to not have to pay NIC's for all apart from the highest earning apprentices. This is a bid to improve the chance of the UK having the highest employment rate in the G9.
Tax on economy flights: Flights from the 1st May 2016 for under 12s will be exempt from tax and also for under 16s from the 1st March 2016.
NHS (National Health Service): £2 billion extra funding has been allocated to the NHS for 2015-16.
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