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Autumn Statement

Let's take you through some essential points from the government’s Autumn Statement.

On Wednesday 3 December, George Osborne presented the government's Autumn Statement.

With a great deal of detail to pour through, we wanted to provide you with some essential points to take away.

Stamp Duty changes

What is it?

Originally introduced in 2003, Stamp Duty Land Tax (SDLT) is a transfer tax which is charged when purchasing a property.

What's new?

There will now be a more graduated system of stamp duty taxation. The changes are designed to help individuals and families buy their own home without incurring major jumps in tax, which buyers have previously experienced around the top of each tax band.

How does it work?

You will now pay stamp duty on the proportion of your house price which falls within that percentage threshold.

The infographic and example below provide details and an explanation of the charges:

Stamp Duty Dec 14

Example:

If you bought a house which cost £185k, you would pay 0% stamp duty on the first £125k and 2% on the remaining £60k. This would equate to a total stamp duty of £1,200. This is a saving of £650 compared to the old rules.

How will it affect me?

The changes are seen as good news for the housing market as the costs of buying a home are reduced in the vast majority of cases. Buyers of very large properties in high value areas will pay more but, for most people, the changes will provide meaningful savings which will help in the home buying process.

The Council of Mortgage Lenders (CML) also calculated that, under the new system, the proportion of mortgage transactions that would pay more tax than under the previous system is approximately 1.5%.

These changes will apply to buyers in England, Wales and Northern Ireland. Scotland will also be included up until the end of March 2015.

Pensions "death tax" abolished

What is it?

When someone passes away, they can leave their unused personal pension pot to their chosen beneficiary, provided they pay a 55% death tax on the value of the pension.

What's new?

The government has confirmed that they will be abolishing the death tax on personal pensions. In addition to this, anyone who dies before the age of 75 with a joint life or guaranteed term annuity will also be able to pass this on tax free.

How will it affect me?

As long as you fall within the above categories, you should be able to leave your unused pension pot to your chosen beneficiary without them having to pay the death tax.

However, anyone who is within a defined benefit scheme will not be able to pass this on tax free. It has been warned that this could lead to a large amount of transfers to other pension schemes where the death tax has been abolished.

There may be a number of changes taking place which could affect your current pension plan. It's an important time to review your pension situation and be sure you're happy with the scheme you're in and how the death tax will affect you and your loved ones.

We will provide more details on changes to the pension rules in 2015 shortly - please check back for more information.

ISA changes

What are they?

Previously, ISAs no longer had a tax-free status once the investor passed away. This meant that their surviving spouse or civil partner would have to start paying tax on the money that their partner had invested.

What's new?

The government has announced that ISAs can now be passed on to surviving spouses or civil partners tax free.

The surviving partner can now also invest as much into this inherited ISA as their spouse did, as well as into their own ISA allowance.

In addition to this, the total amount you will be able to invest in an ISA in the tax year 2015/2016 will rise from £15,000 to £15,240.

There has also been an increase for those investing in Child Trust Funds and Junior ISAs, with the rate increasing from £4,000 to £4,080.

How will it affect me?

These changes will allow for people to plan better for their future in financial terms, providing more opportunity to save in a tax-efficient way through their own ISA and the ISA inherited from their deceased partner.

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