AUTUMN
STATEMENT 2013
Pension boost
People who reach pension age before the reformed state pension begins on 6 April 2016 will be able to boost their pension by up to £25 a week if they buy a new sort of National Insurance contribution. The extra pension will be on top of their basic pension even if they have already got a full one. The cost of these new class 3A contributions and the detailed eligibility rules will be announced next week. But it will help millions of existing pensioners including hundreds of thousands of women who feel they are losing out because of the rising state pension age.
Pension age
Pension age is set to rise to 70 under plans announced by the Chancellor today. Details have still to be finalised but it seems likely that people in their early 20s will have to wait until they are 70 before they can claim a state pension. We already know state pension age will rise to 66 by 2020 for those born in 1954 or earlier and 67 by 2028 for people born in 1961 or earlier. The new plan is for everyone to spend about a third of their adult lives on the state pension. So people in their forties will have to wait to 68 before they get their state pension; people in their thirties until they are 69. And those in their twenties will have to wait until they are 70. More details on the exact dates and age boundaries will be published soon.
Marriage boost
The new marriage tax allowance will begin as planned from April 2015. It will help about four million married couples and civil partners, about 1.4 million of them over pension age. If one spouse does not pay tax they will be able to transfer up to £1000 of their personal tax free allowance to the other who will then save up to £200 on their tax bill. The Chancellor said the figure of £1000 would rise with inflation. The allowance will not apply to unmarried couples or where one partner pays higher rate tax.
Tax disc
The tax disc on your car will be scrapped form October 2014. But don't get too excited, the tax - called Vehicle Excise Duty or VED - will still have to be paid. The disc was first issued in 1921 when the tax was £6 - equal to about £230 today. But today the disc is not used by the police who rely instead on the DVLA database which links the insurance, VED, and MoT records to every vehicle through their number plate. From October you will be able to spread the cost by monthly direct debit payments but there will be a 5% premium. And the extra cost of paying for six rather than twelve months will also be 5% - down from the current 10%.
Savers
forgotten
There was little new for savers in the Autumn Statement. The tax free ISA allowance was just raised with inflation. From April you can put £11,880 into an ISA and half of that - £5940 - can be in cash. The one glimmer of hope is that the rate of unemployment is forecast to fall to 7% by 2015/16 and that level is the trigger for the Bank of England to look at whether it should raise interest rates.
Second home
tax rise
A tax concession which helps people when they sell a second home is to be made less generous. At the moment when you sell a home that is not your main residence you are liable for Capital Gains Tax on the rise in its value. But the gain over the last three years of ownership is ignored. In future that will be restricted to the gain in the last eighteen months. That will save the Chancellor £100m a year by 2015.
State pension
rise
The basic state pension will rise by £2.95 a week from April, in line with inflation, to £113.10. Other parts of the pension will also rise by 2.7%. The basic pension credit rate will go up by the same cash amount of £2.95 but the savings credit for those on slightly higher incomes will be restricted. More details on this and other benefit rises will be published next week.
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