News sites are awash with Autumn Statement coverage as journalists delve into the small print of the documents looking for those devilish details. Here are the 10 key takeaways from this afternoon.
1. Stamp duty is no longer a cliff edge.
It’s the big headline of the afternoon (though even this last flourish was leaked in advance): the anachronistic cliff edge stamp duty thresholds are being abolished, from midnight, and replaced with more graduated income tax-style system.
Under the new rules, there will now be no tax payable for houses worth less than £125,000, 2 per cent on the portion of any value above this and up to £250,000, 5 per cent on the next portion up to £925,000, 10 per cent up to £1.5m, and 12 per cent thereafter.
For a £185,000 property you’ll pay nothing on the first £125,000 and 2 per cent on the remaining £60,000. This works out as £1,200, a saving of £650 on the old rules.
It will be interesting to see the effect on the property market. Will, for example, property values that currently cluster just south of a ‘slab’ threshold begin to creep upwards?
2. Death tax cuts go on pensions...
Yep, as we knew from the party conference season there will be no tax when passing on a pension - and this has been extended beyond the value protected annuities we knew back then were included to both joint life and guaranteed annuities.
This ensures that drawdown and annuities have been equalized, but as several commentators have said, there is a major discrepancy opening up in relation to defined benefit pensions. Transfers a go-go, some say.
3. ... And on Isas too.
Elsewhere, and in probably the only announcement we weren’t broadly expecting, the chancellor announced Isas can now be passed on to a surviving spouse or civil partner tax free. If the inclusion of Aim shares didn’t herald the era of the IHT Isa, this might.
It also signals a convergence of policy on these two key tax-incentivized saving policy areas. As a colleague said to me today, and has been suggested by the Centre for Policy Studies, we might be moving longer term towards the merging of pensions and Isas into a single savings regime.
4. Two U-turns mark a slowdown in tinkering.
An attempt to clamp down on IHT avoidance through the use of multiple trusts was scrapped, as was another plan to introduce tax relief on contributions for those over the age of 75 ahead of a likely increase in older saver provision.
Both were subject to consultation and both deemed too complicated to push through in their current guise. The document suggests however, that the former of these proposals may yet return in another form as the government indicated it isn’t finished with this issue yet.
5. Public finances are open to interpretation.
Depending on who you listen to, the government has either saved us all or made a right horlicks of clearing the deficit.
Chancellor George Osborne said the deficit is half what he inherited and will continue to fall until the country is in surplus by 2018. He even said new figures show the deficit is worse than expected now but the surplus in four years will be higher than previously thought.
On the other hand, Ed Balls cited borrowing being revised up for the next two years, claiming we are in a “cost of living crisis”. He also pointed out the prime minister has borrowed £219bn more than he planned.
6. Investment Manager fee scrutiny...
The government is set to crack down on investment managers as part of a range of measures designed to tackle people who are “aggressively trying to avoid tax”, though no one quite knows the implications of this yet.
In a statement released by HMRC, the government outlined its plans to target investment managers effective from April 6 2015. It said it would introduce legislation to “ensure that sums which arise to investment fund managers for their services are charged to income tax.
7. ... Among a raft of tax clampdowns.
But this was just one strand of many in the complex web of tax avoidance the government is seeking to clamp down on: others include increasing tax for non-doms, ensuring multi-national businesses pay at least 25 per cent tax on revenues they ‘divert overseas’.
The country’s banks have also been landed with an additional tax bill of potentially £3.5bn after the chancellor announced measures to limit how much of their profits they get tax relief on. ‘Fairness’ was a word bandied around a lot.
8. Working age taxpayers will benefit.
All of this is helping to pay for ongoing changes to tax bands, including confirmation that the government will seek raise the lower rate income tax threshold to £12,500 and begin with a bigger-than-expected increase next year to £10,600.
The 40 per cent tax band is also seeing its first increase in a number of years in a second “downpayment” on future increases: from £41,865 this year to £42,385 next year.
9. Major projects: Northern hub and roads.
Money raised or saved from various initiatives will also go towards some major - and again, pre-announced - infrastructure projects, such as road building and tendering for new franchises for Northern rail. The north will also get its own fracking sovereign wealth fund.
10. Overhaul of business rates.
The second major nationals leak of the day had been the news that business rates will be subject to a thorough review; their first for 400 years. This was confirmed, and could be good news for all you small business owners out there.
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