Yesterday's autumn statement was refreshingly different from the offerings of recent years. For once the Chancellor was afforded the opportunity to present a more positive picture of the state of the UK economy, claiming recent economic data showed the coalition's economic plan was gaining traction. Growth has exceeded previous predictions, with the economy expected to grow by 1.4% this year, faster than any other major economy. However, the Chancellor was keen to stress that the hard work isn’t over yet, with the job of recovery “not yet done".
To help give you an overview of the measures in the statement that might affect you, we have outlined below a quick round-up of the key news from the Chancellor’s Autumn Statement.
• The total size of a pension pot that can be built up will be reduced from £1.5m to £1.25m in April 2014. The amount you can save each year will fall from £50,000 to £40,000.
• The basic state pension will increase by £2.85 a week in April 2014, taking the basic payout to £113 a week.
• Pension age to rise to 68 in the 2030s, rising again to 69 in the late 2040s. This means that people now in their forties will not get the state pension until they are 68, while those in their thirties will need to wait until they are 69.
• From April 2014, the basic personal allowance, the amount you can earn before tax is applied, will increase from £9,440 to £10,000. The increase in basic personal allowance will mean an extra £112 a year.
• As previously announced at the Tory conference in October, the Government will introduce a £1,000-a-year tax-free allowance per married couple or civil partnership. The allowance can be transferred between the couple to maximise the benefit, but would be available only when neither person pays the higher rate of tax.
Savings and Investments
• Investors will be able to save £11,880 in a stocks-and-shares Isa for the year 2014-15.
• From April 2014, a new tax relief is to be introduced for investment in social enterprises and new social impact bonds.
• There are plans to remove some of the green levies wrapped up in household energy bills, which is expected to save households £50 a year.
• January train fares were due to rise by 1% above inflation. However, average train fares will now remain flat in real terms, rising only in line with inflation.
• Car tax discs are to be scrapped and replaced by electronic vehicle excise duty system.
• Next year’s planned fuel duty rise of 2p has been cancelled.
For further details regarding the new measures from the Chancellor’s Autumn Statement, click here.
If you have any questions, please feel free to contact Retirement and Investment Solutions.