Autumn Statement: What it means for you

Primarily an update on the state of the nation’s finances, the Autumn Statement also includes some key decisions that affect the money in people’s wallets or purses.

Chancellor George Osborne said the contents were a signal of “staying on course for prosperity”. This was the final Autumn Statement before the General Election in May next year.

It follows a Budget in March that was packed with announcements affecting savings and pensions amid the continuing programme of austerity.

The Autumn Statement is always the smaller, less illustrious stablemate of the Budget, but still, some measures announced are likely to be significant for personal finances.

Not least, there was a big new change that will affect many people buying a home.

What was the big announcement for house buyers?
One move that has been made, probably with one eye on a looming election, is a complete overhaul of the stamp duty system.

Rising house prices have pushed many homes into a new bracket of tax.

Under the present system of stepped increases, £2,500 is levied in stamp duty when a house is bought for £250,000. However, this bill triples if buyers pay a penny more than that for a property.

The chancellor has announced a massive change in the way stamp duty is levied. The surprise is that this will take effect almost immediately.

The new system will mean rates apply only to the part of the property price that falls within each band when it is bought.

No stamp duty will be paid on the first £125,000 of a property, then 2% will be paid on the portion up to £250,000, then 5% up to £925,000, then 10% up to £1.5m, then 12% on anything above that.

The politics behind this is a move to tax buying mansions, instead of a tax on owning mansions, which has been suggested by Labour.

We often hear about the tax-free allowance? Has that happened this time?

Taxpayer definition
Yes, the chancellor has an aspiration to make anyone who earns less than £12,500 to be free from paying income tax.

He is not near that figure yet. However, he announced that the personal allowance will rise to £10,600 in April rather than the planned £10,500 next year.

The threshold at which taxpayers start to pay the 40% higher rate will increase to £42,385 in April – again, £100 more than expected.

Savers have been hit by low rates. Was there any help for them?

Shredded bank balance
In July, a much higher limit of tax-free Individual Savings Accounts (ISAs) came into force. A total of £15,000 can be saved in an ISA in cash or shares.

This limit will be raised to £15,240 in April.

At present, any savings in an ISA lose their tax-free status when somebody dies and their spouse starts paying tax on those savings.

The chancellor said that, with immediate effect, when someone dies, their husband or wife would be able to inherit their ISA and keep its tax-free status.

I think I need a break. Any news on travel?
The cost of air tickets for children is likely to go down.

From 1 May next year, Air Passenger Duty for children under 12 will be abolished, and the same will happen for under-16s the following year.

Airlines will also be required to list the charges separately from taxes on tickets.

On the roads, as expected, drivers will not see a rise in fuel duty. It has been frozen again.

What about wages?
For some time wages were lagging behind the rising cost of living, as measured by the inflation rate.

The independent Office for Budget Responsibility (OBR) predicts that there will be above-inflation rises in wages in the next five years.

And what about benefits?

There were more welfare cuts announced, including Universal Credit work allowances being frozen for another year.

In addition, Mr Osborne said tax credits when overpayments were certain would be cut, and unemployment benefits would stop for migrants with no prospect of work. This would bring spending down a further £1bn, he said.

A number of major welfare payments already have a cap on annual increases.

http://www.bbc.co.uk/news/business-30293477