Autumn Statement & You

An overview of the changes that will affect your finances over the coming years

Alanna Petroff 5 December, 2012 | 4:10PM
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Chancellor George Osborne revealed his Autumn Statement on Wednesday, which outlined future plans for taxes and government spending.

Below is a list of some noteworthy announcements from the Autumn Statement that could affect your finances, investments, pensions and taxes over the coming years.

Fuel Duty
The 3p/litre rise in fuel duty that was scheduled for January has been cancelled.

Income Taxes
The government is raising the tax-free personal allowance by a further £235 to £9,440 in the 2013-14 tax year. This means that you will not pay tax on the first £9,440 that you earn in income each year.

The threshold for the 40% income tax rate is set to rise by 1% per year in the 2014-2015 tax year and in the 2015-2016 tax year. In simple terms: when you make above £41,450 in income per year, you will pay a 40% tax rate on the income you make that is above that £41,450 threshold. But that threshold will rise to £41,865 in the 2014-2015 tax year, and then it will rise again to £42,285 in the 2015-2016 tax year.

Pensions
In the 2014-2015 tax year, the government will cut back on some tax relief for pension contributions. The lifetime tax-relief allowance for pension savings will be cut from £1.5 million to £1.25 million and the annual tax relief allowance will be reduced from £50,000 to £40,000.

The basic state pension will rise by 2.5% to £110.15 a week in the 2013-2014 tax year. That is an increase of £2.70 per week.

ISAs
The ISA contribution limit for the 2013-2014 tax year will be raised to £11,520. The current maximum that you can put into an ISA for the 2012-2013 tax year is £11,280

The government is considering allowing investors to buy and hold AIM shares within their stocks and shares ISA accounts. Osborne said this move would give a boost to small companies if it is implemented.

Pension Drawdown Policy
The government plans to increase the capped drawdown limit for pensioners of all ages to 120% of the value of an equivalent annuity. The rate had been set at 120% beforehand, but was brought down to 100% in 2010.

Corporation Taxes
Corporation tax is set to be cut by another one percentage point in the 2014-2015 tax year. This means businesses will pay a 21% tax rate starting in April 2014. Osborne says this is amongst the lowest corporate tax rates in the Western world.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.