The Chancellor’s Autumn Statement – the Taxy bits

A summary of the main UK tax changes announced December 3rd 2014. For info on the changes affecting inheritance and pensions, please see The Chancellor’s Autumn Statement – the Sexy bits blog.

Personal Allowance – Income Tax

The personal allowance will be increased to £10,600 in 2015-16, £100 more than previously stated. The higher rate (40%) threshold will be £42,385.

ISA changes

From April 2015 the ISA allowance will rise to £15,240, following the substantial rise last summer to £15,000.

Junior ISA and CTF raised to £4,080 p.a.

Non-Domicile Basis of Taxation – Charges to Increase

Non-Doms not Dum-dums

Non-Doms not Dum-dums

Non-doms (a phrase which always makes me think of the Easter Island talking head in “Night at the Museum”) who choose to use the remittance basis and have been resident for at least 7 of the past 9 years, currently pay a charge of £30,000, rising to £50,000 once resident for 12 out of 14 years. This latter amount will increase to £60,000 (from £50,000) in 2014/15, and a new charge of £90,000 will be brought in for those who’ve been resident 17 of the last 20 years in the UK.

The Government will also consult on making the choice to pay the remittance basis charge stick for a minimum of 3 years, so that non-doms are not easily able to swap the basis on which they’re taxed from one year to another.

Non-doms might consider using offshore bonds to help mitigate their taxation, since offshore bonds are not taxed until a chargeable gain arises, and hence controlling chargeable gains can control the tax.

Stamp Duty – changes to rates 

Stamp duty will now cost less to the average house buyer. The Chancellor has introduced (with immediate effect) a banded system whereby you pay across all relevant bands, not just the highest applicable to your property. They are revised as follows:

Purchase price of property (£)
 
New rates paid on the part of the property price within each tax band
Tax Within the band
0 – 125,000
0%
    Nil
125,001 – 250,000
2%
£2,500
250,001 – 925,000
5%
£33,750
925,001 – 1,500,000
10%
£57,500
1,500,001 and over
12%
£ ++++

The magic value is £937,500. Below that there is less duty to pay than previously, and above that there is more.

Interaction of Flexible Pensions and Means testing of Govt. Pension Credit

The treatment of existing pensions, both crystallised and uncrystallised, is now slightly more favourable when means-testing state benefits. The notional income factor to be applied to such benefits is now based on 100% of an equivalent annuity rather than 150%, the previously factor. However, if the income actually being drawn is greater than this, it will be the higher figure that is taken into account.

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