Autumn Statement 2014 – tax changes

Summary of tax changes announced in Autumn Statement 3 December 2014

  1. Income tax free allowance increased to £10,600 for 2015/16 and rate of inflation increase also passed to higher rate taxpayers with the higher rate tax band raised to £42,385.
  2. Transfers of ISAs to surviving spouses introduced so ISA status maintained and spouse can inherit tax free – this will have immediate effect. The ISA allowance is to be raised to £15,240 in April 2015.
  3. Abolition of 55% tax on pensions handed down to family members to come into force in April 2015. The new rules mean that if a person who dies is 75 or over, the person who receives the pension pot will only pay their marginal income tax rate as they draw money from the pension. If someone aged under 75 dies, the person who receives the pot is able to take money from the pension without paying any tax. In addition beneficiaries of individuals who die under the age of 75 with a joint life or guaranteed term annuity will be able to receive any future payments from such policies tax free. The tax rules will also be changed to allow joint life annuities to be passed on to any beneficiary.
  4. Major overhaul of stamp duty land tax on purchases of residential property. The tax is to be levied on a marginal basis and changes to come into effect as from midnight 4 December 2014.

Up to £125,000 – no tax
Up to £250,000 – 2%
Up to £925,000 – 5%
Up to £1.5m – 10%
Above that – 12%

The Government contends that this results in a stamp duty cut for 98% of homebuyers who pay it; the changes will mean a stamp duty increase if you buy a property anything above £937,000.

5    IHT exemption currently available to persons killed in armed forces now also available to families of aid workers who lose their lives dealing with humanitarian emergencies.

6    Fuel duty frozen

7    Air passenger duty to be scrapped from 1 May 2015 for under 12s and for under 16s the year after.

8  Introduction of 25% tax on profits generated by multinational companies from their economic activity in the UK and rules allowing banks to offset losses made in the financial crisis against future profits to be limited.