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Autumn Statement from the UK Government

Wed, 10 Dec 2014

 

Income tax allowances and tax rates
The personal allowance will increase to £10,600 from 6 April 2015, an increase of £100 from previously announced. The basic rate limit changes to £31,785 (currently £31,865) with the higher rate threshold above which income tax is payable at 40% increasing to £42,385.

Starting rate limit
The starting rate limit on savings income will increase to £5,000 (currently £2,880) for the 2015/16 tax year. Remittance basis charge for resident non domiciles .The annual charge that is currently payable by non domiciled individuals resident in the UK who wish to retain access to the remittance basis will increase:

·         The charge paid by people who have been UK resident for 7 out of the last 9 years will remain at its current level of £30,000

·         The charge paid by those who have been UK resident for 12 out of the last 14 years will increase by £10,000 from £50,000 to £60,000

·         A new charge of £90,000 will be introduced for those who have been UK resident for 17 of the last 20 years. The government will consult on making the election apply for a minimum of 3 years.

 

Tax credits
Tax credit payments will be reduced in-year from April 2015 where, due to a change of circumstances, a claimant would otherwise receive an overpayment.

 

Support for carers
The carer's allowance earnings limit will increase from £102 to £110 per week from April 2015.

At the same time the government will extend the £2,000 annual NICs employment allowance to households that employ care and support workers. This means that a family will be able to employ a care worker on a salary of up to £22,500 and pay no employer NICs. Carers will be exempted from the impact of removing the £8,500 threshold below which employees do not pay income tax on benefits in kind.

 

Enlarging the Social Investment Tax Relief Scheme
Subject to state aid approval, the government will increase the investment limit to £5 million per year per organisation, up to a maximum of £15 million per organisation. Small scale community farms and horticultural activities will be eligible for the relief from 6 April 2015.

 

Car benefits
The company car fuel benefit multiplier increases from £21,700 to £22,100.

 

Van benefits
The standard van fuel benefit increases to £594 (currently £581) while the van benefit charge is increasing to £3,150 (currently £3,090).

 

Savings

ISAs
The savings limit for an ISA will increase from £15,000 to £15,240 from 6 April 2015. At the same time the Junior ISA and Child Trust Fund subscription limits both increase from £4,000 to £4,080.

Transfers to spouses and civil partners on death
Legislation will be introduced from 3 December 2014 to allow an additional ISA allowance for spouses and civil partners when an ISA saver dies, equal to the value of that saver's ISAs.

 

Pensions 
Savers will be able to access their defined contribution pension as they wish at retirement from April 2015. This will be subject to their marginal rate of income tax, instead of the current 55% charge for full withdrawal.

 

Further to the recent announcement regarding people being able to pass on their pension pot to the next generation, the government confirmed that if the individual dies before age 75, the beneficiary will pay no tax on the funds. If death occurs after the age of 75, the beneficiary will pay their marginal rate of income tax, or 45% if the funds are taken as a lump sum payment. The lump sum payments will also be taxed at the recipient's marginal rate from April 2016.

From April 2015, beneficiaries of individuals who die under the age of 75 with a joint life or guaranteed annuity will be able to receive any future payments from such policies tax-free. It will also be possible to allow joint life annuities to be passed on to any beneficiary. 

 

Pensions flexibility 
A reduced annual allowance of £10,000 will be introduced for money purchase contributions for individuals who have flexibly accessed a pension from 6 April 2015.

 

Pension credit
The savings credit threshold will rise by 5.1%. As a consequence, the new flat rate state pension will be at least £151.25 a week. The actual final amount of this new flat rate pension is to be announced in autumn 2015.

 

Capital taxes

Inheritance tax (IHT)
Exemption for medals and awards
The existing IHT exemption for medals and other decorations that are awarded for valour or gallantry is to be extended. From 3 December 2014, this applies to all decorations and medals awarded to the armed services or emergency services personnel, and to awards made by the Crown for achievements and service in public life.

Exemption for emergency services personnel and humanitarian aid workers
The IHT exemption for members of the armed forces whose death is caused or hastened by injury while on active service will be extended to members of the emergency services or humanitarian aid workers responding to emergency circumstances. This extension is to have effect for deaths on or after 19 March 2014. 

 

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