What does the Autumn Statement mean for you?

From midnight tonight, radical reforms to stamp duty will bring savings to 98 percent of homebuyers.

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The much-criticised ‘slab’ system, where a flat rate of tax was applied to 100% of the price, has been replaced with a tiered approach.

Previously, a property worth £275,000 would attract Stamp Duty of £8,250.

Under the new regime, the first £125,000 of the price will be tax-free, while the band between £125,001 and £250,000 will be taxed at 2%. 

The final slice between £250,001 and £275,000 will be taxed at 5%, giving a total tax bill of £3,750 – a saving of £4,500.

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The most common words in the Autumn Statement

TIERED STAMP DUTY RATES AS OF MIDNIGHT

-No tax on the first £125,000

-2% on the slice between £125,001 and £250,000

-5% on the slice between £250,001 and £925,000

-10% on the slice between £925,001 and £1.5m

-12% on everything above that

A major benefit of the new system is that buyers of homes priced just over £250,000 will not be hit by a sharp increase in the amount of duty they pay.

INDIVIDUAL SAVINGS ACCOUNTS

The maximum you can invest each year in an Individual Savings Account will increase to £15,240, up from £15,000, from April 2015.

The Chancellor also announced that an individual’s ISA holdings will pass tax-free on their death to their spouse (or civil partner). Currently, your tax-free ISA status dies with you.

The government will also consult on whether to allow ‘crowdfunding’ investments into ISAs.

Crowdfunding is when individuals contribute towards a capital sum used to launch or sustain a business venture.

Further details on peer-to-peer lending within ISAs is expected in the next Budget.

The annual investment limit in Junior ISAs and Child Trust Funds will edge up by £80 to £4,080 from April.

CURRENT ACCOUNTS

The Chancellor announced improvements to the Current Account Switch Service (or the 7-Day switch), which was introduced in September 2013 to make it easier for customers to switch to a new provider.

Guarantees under the original scheme, such as payments coming into your old account by error being automatically redirected to the new one, lasted for 13 months from the switch date.

This has been nearly tripled to 36 months.

The scheme is also being extended to small businesses.

The Chancellor has asked the regulator, the Financial Conduct Authority, to examine the prospect of reducing the switch time from seven working days to five working days. Kevin Mountford, MoneySuperMarket’s head of banking, commented: “Reducing the switching limit from seven to five working days would be a positive move as switching could be done and dusted in a week.”

PENSIONS

The Chancellor is abolishing, from next year, the 55% ‘death tax’ charged when a pension pot transfers from someone who dies to their surviving spouse or civil partner. These transfers will in future be tax-free.

He added that an annuity belonging to anyone who dies before age 75 will also transfer tax-free to their surviving spouse or partner.

Pensioner bonds

Those aged 65 and over will have to wait until Friday December 12 to find out the interest rates on the new Pensioner Bonds, which launch in January 2015.

In his April Budget, the Chancellor suggested rates of 2.8% for the one-year fixed rate account and up to 4% for the three-year alternative.

The maximum balance in these accounts is, to date, unchanged at £10,000 per individual per account – giving a potential maximum investment of £20,000 per person.

UPDATE ON DECEMBER 12: The Chancellor confirmed rates will, indeed, be 2.8% and 4%

UPDATE ON FEBRUARY 9, 2015: Pensioner Bonds have will now be available until May 15, 2015

INCOME TAX

The personal allowance will rise in April 2015 to £10,600, not £10,500 as planned – meaning 3.5m of the lowest paid being taken out of tax altogether. 

The higher rate (40%) tax threshold will rise from £41,865 to £42,385 from next April, pulling around 138,000 earners down into the 20% standard rate tax bracket.

According to the Chancellor, the higher rate threshold will reach £50,000 by the end of this decade.

Dan Plant, MoneySuperMarket’s editor in chief, said: “This is the first increase to the higher rate tax threshold for five years. It means fewer people will pay 40% tax, so they’ll have more in their pay packet each month.”

AIR PASSENGER DUTY

Families will benefit from changes to Air Passenger Duty (APD). From May next year, children under 12 will be exempt from APD on economy tickets. This exemption will be extended to children under 16 from March 2016.

The government reckons this will help reduce the cost of holidays for families by up to £71 per child.

FUEL TAX DUTY

Fuel tax duty will remain frozen at 57.95 pence per litre.

Motorway service station fuel price comparison signs will be placed along a stretch of the M5 between Bristol and Exeter in 2015 amid growing concern that motorists are being hit with punitive fuel prices if they fill up at a service station.

The government has also announced that driverless car trials will take place in Bristol, Milton Keynes, London and Coventry next year.

INFRASTRUCTURE

There will be extra spending on infrastructure projects including road improvements (£15bn) and flood defences (£2.3bn).

Projects have also been announced to improve the Trans-Pennine railway and create a new link road for Leeds-Bradford airport.

WHO’LL BE THE NEXT CHANCELLOR?

So what do you reckon? Will the Chancellor’s speech affect how you vote in the General Election on May 7 next year?

Let us know by voting in our poll.

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