What you need to know about the Autumn Statement 2014
On 3rd December 2014 George Osborne gave us his Annual Autumn Statement which for reasons best known to someone else is in December. But that’s not important right now and if you’re like me it will be googled later. Anyway here are some of the main points relevant to your personal financial planning broken down into relevant headings.
The income tax personal allowance will rise to £10,600 in April 2014 which is £100 higher than expected. The higher rate tax threshold will also increase to £42,385 in April, again £100 more than expected.
Anyone in receipt of Universal Credit will find their benefits frozen for the coming year.
The ISA limit has been raised to £15,240 in April. The chancellor has also said that with immediate effect when the saver dies their spouse will inherit the ISA and be able to maintain its tax free status. This could be very interesting for future IHT planning.
As expected the Chancellor announced that if you die prior to age 75 in receipt of a joint life annuity pension your dependents with receive the dependents income tax free.
This brings joint life annuities in line with flexi-access drawdown but there was no mention of final salary schemes dependents pensions so watch this space.
There were no changes to the tax relief through pensions either before or after age 75.
The single tier state pension is expected to start in April 2016 at £151.25 per week.
As usual the Government wants a headline maker in the Autumn Statement and this year it’s stamp duty. The stamp duty system has been revamped from a stepped to a tiered charging system as show below.
The End is Nigh… well the end of the tax year that is
Last minute tax planning is less than ideal but it’s better than no tax planning. Every year we all get our tax allowances and every year we get the same warning before April 5th… use it or lose it.
What are the tax allowances for this year?
I’m going to limit this post to the main two tax allowances, Pensions and ISAs. Simply because for most of the population these are more than enough to cover our financial planning needs.
ISA Allowances 2013/14 & 2014/15
Up to the 5th April 2014 you can invest up to £11,520 in ISAs of which £5,760 can be invested in a Cash ISA. Remember there is now carry forward of unused allowances with ISAs. From 6th April your annual ISA allowance will increase to £11,880 with a maximum of £5,940 in cash.
For those who have a little more to invest and want to create a fund for their child there are allowance for Junior ISAs and Child Trust Funds as detailed in the table below.
Up to the 5th April 2014 you can invest up to the lower of 100% of your gross earnings or £50,000 in a registered pension scheme. From 6th April your annual pension allowance will reduce to £40,000 however carry forward is allowed under certain rules.
Although it won’t affect most of us it’s important to remember that there is a lifetime allowance to consider. This is being reduced from £1.5m to £1.25m from 6th April 2014.
Again for those with a little more to invest there are children’s allowances available.
Beware the Tax Dog
Remember that just because it is tax efficient doesn’t necessarily mean it’s the most suitable investment for you or your objectives. Think carefully about what you want to achieve before making any investment. Obviously as a Financial Planner I am going to recommend getting advice but if you are in any doubt on how to proceed then get in touch on 02895 815000.