The Autumn Statement is made in addition to the March budget, but frequently includes measures that directly affect personal finances.
The Chancellor said he planned to reward savers, hard-working people and those who aspire to buy a home.
The major change was to stamp duty, which the Chancellor acknowledged has become a greater burden on lower and middle-income families.
A significant increase in house prices over recent years has pushed many homes into a higher stamp duty category. The average house price has been driven up well above £250,000, according to the Office for National Statistics (ONS), and so falls into the 3% category rather than the 1% category.
For those buying a home, the tax will now move from a single-slab payment on the whole amount to a system where rates apply only to the portion of the value that falls within that category at the time of purchase – similar to income tax.
Under the current system, those who purchase a home at £250,000 pay 1% on the whole amount (£2,500). Paying just £1 more takes the property into the 3% stamp duty category, which means the buyer’s bill leaps to £7,500.
Under the new system, no tax will be payable on the first £125,000 of the property. After this, buyers will pay 2% on the portion of the value up to £250,000 (rather than the whole amount) and so forth, as described below.
New Stamp Duty Rates (Effective Midnight)
- £0 - £125,000 – 0%
- On the portion £125,000 - £250,000 – 2%
- On the portion £250,000 - £925,000 – 5%
- On the portion £925,000 - £1.5m – 10%
- On anything above – 12%
People buying an average home, priced at around £275,000 by ONS measures, will pay £4,500 less under the new measures, the chancellor said.
The tax free ISA allowance will rise to £15,240 from April 2015, it was also announced.
In July, savers saw the largest increase in the tax-free allowance since the accounts were created as part of a package of measures introduced to reward savers.
Many have complained at falling savings rates since then, however, and the government’s measure to include the increasingly popular peer-to-peer accounts within the ISA wrapper awaits next year.
In a welcome move, spouses will no longer face taxes on joint-life annuities or savings pots held by loved ones if they die before the age of 75.
Tax has been abolished on annuity pension payments made to spouses after their partner has passed away, while ISA accounts will retain their tax free status when they transfer to the next of kin.
Other measures announced include a reduction to Air Passenger Duty for children (APD), and a continued freeze in fuel duty.
APD will be abolished for under 12s from next May, and for under 16s from 2016.
The chancellor said he expected a fall in fuel price surcharges, adding that airlines would be pressurised to make their fuel surcharges clear within any extra costs that are added on to base flight prices.
The basic income tax allowance is to rise by a further £600 from April, to £10,600. The chancellor described this as a first step towards taking those earning minimum wage out of tax altogether.
However, Shadow Chancellor, Ed Balls, rebuked the government on living standards, saying that wages had failed to keep pace with prices for 52 of the last 53 months.