The Autumn Statement – How will the changes affect you?
This week in his statement on the state of the economy, George Osborne announced several changes to taxes that will affect both businesses and individuals. So will the changes affect you, and will you be better or worse off, on average, than you were this year.
The personal allowance is being increased more than expected, by an extra £235. The current threshold is £8105, which is rising to £9440 from 5 April 2013. This is good news for everybody.
However, the band at which income is taxed at 20% is being reduced, from £34370 to £32010. This has the effect of pushing more people into the 40% tax rate band.
Investors and savers will also benefit: the annual exempt amount for Capital gains is increasing by 1%, to £11,100, and the ISA limit is increasing to £11,520.
Pensions: The lifetime allowance is being cut from £1.5m to £1.25m, and the annual contribution allowance is decreasing from £50,000 to £40,000. The state pension is set to rise 2.5% from April (to £110.15/week)
It was also announced that the inheritance tax nil-rate band will be increased by 1% (up to £329,000) in 2015/16
Although the main rate of income tax is being cut to 21% in 2014/15 (for FY 2013 the rate is 23%), there was no announced cut to the small business rate, which remains 20%.
However, several measures and changes were introduced to promote small business growth;
- The temporary doubling of the small business rate relief scheme is being extended by a further year, to April 2014.
- The annual investment allowance is being increased tenfold, up to £250,000.
- The scrapping of the intended 3p fuel duty increase.
- An extra £1bn capital has been set aside for Business Bank.
It was announced that there will be a substantial increase in infrastructure investment, especially in high-speed internet expansion, schools and transport infrastructure – an extra £1bn for roads, and a loan for the Northern Line extension to Battersea.
For specific advice and further information about how these changes could affect your business, or your personal tax liability, please seek the advice of your accountant.