What difference will the 2013 Autumn Statement make to you?
Chancellor George Osborne will cop his fair share of flak in tomorrow’s newspapers after the announcement the rise in the pensionable age to 68 will be brought forward to the mid-2030s.
However, there is a lot more to Mr Osborne’s Autumn Statement than that – with various measures that may or may not affect you.
As always there are winners and losers but we’ve given our verdicts below so you don’t have to paw through the small print. Cross your fingers and read on:-
How the 2013 Autumn Statement affects the man on the street
The personal allowance – the tax free amount you can receive each year – is being increased to £10,000 from April 2014.
This is generally good news for basic rate taxpayers – those on a salary below approximately £40k – as they will be an extra £112 better off.
However, as in previous years, the increase is also matched with a reduction in the total basic rate band, meaning that more people will be pushed into the higher rate tax bracket.
Additionally, future personal allowance increases have been linked to the Consumer Price Index, similar to the increase in weekly pension payments.
The total ISA threshold will be increased to £11,880, in line with inflation.
The widely-vaunted married couples allowance was confirmed. This will allow qualifying couples in a marriage or civil partnership to transfer £1000 of their personal allowance from one person to the other.
To qualify for this relief, neither spouse must be a higher rate taxpayer and one must be earning less than the personal allowance. The total tax saving available will therefore be £200.
Further to this, there is some discussion on how the allowance will be implemented. One way would be through the self-assessment system, similar to how the higher income child benefit charge was introduced.
One questions, however, how much the saving of £200 is worth if you then have to pay somebody to submit your tax return for you. Less than £200 anyway – that’s for sure.
Overall: plenty of good news for basic rate taxpayers but higher-rate earners will be slightly worse off.
How the 2013 Autumn Statement affects small businesses
Several announcements were made with the intention of encouraging businesses to expand.
The increase in business rates will be capped at 2% from April 2014 and there will be extra incentives for those moving into vacant premises.
However, Mr Osborne stopped short of a full review of the business rates system, which many believe to be outdated.
Employers’ National Insurance contributions will be scrapped for employees younger than 21.
Combined with the previously announced £2000 NI allowance, this is a clear move by the government to encourage youth employment while fuelling the growth of the small business sector.
Overall: great news for youngsters and small businesses.
How the 2013 Autumn Statement affects Capital Gains Tax
As we reported last month, the Chancellor announced that from April 2015 Capital Gains Tax will be payable by non-resident owners of UK property. This will no doubt be a very popular measure.
However some may be critical of the year delay that has been implemented, which will allow some foreign investors to ‘escape’ paying their tax.
If you listen carefully enough, you can already hear Margaret Hodge clearing her throat ready to launch into a tirade about that.
In a less-publicised change, the Principal Private Residence relief available on the sale of your property is being reduced from three years to 18 months.
This rule has long been relied upon when calculating the Capital Gains Tax due on a property (CGT 101: you have three years after you move out of your PPR before there will be any CGT to pay).
Overall: the changes to foreign ownership rules will be popular but we wait to see what actual impact they will have.
The capital gains tax applying to foreign buyers in the UK will only be applied to any increase in the value of the property from April 2015. So good news for property valuers, possibly.