The relevant headlines
The 2015 Autumn Statement announced both expected and unexpected news. With no radical changes proposed for private pensions, many will breath a sigh of relief. However, news of extra SDLT for second homes and buy-to-let properties could leave prospective property investors unsure of their next move. Read the headlines that are most likely to affect doctors and dentists.
Government Spending Review
As part of the Autumn Statement 2015, the government presented it’s Spending Review with forecasts to 19/20.
Key points:
- GDP growth forecast is 2.4% for 2015 and 2016, rising to 2.5% in 2017
- Consumer Price Index (CPI) Inflation will fall below the 2% target for 2015, but measures will be taken for it to return to 2% by 2019
- Public finances to return a surplus of £10.1 billion in 19/20 and £14.7 billion in 20/21
- Government borrowing as a % of GDP is set to fall to 3.9% in 2015 and then to fall each year until 19/20, see below
Graph by – Office for National Statistics (ONS)
Read more: Download our full Autumn Statement Summary
Retirement matters
George Osborne announced that right now there will be no changes to the private pension system, which was one subject that could have gone either way.
There are still key changes on the horizon, including the reduction in the annual allowance for high earners.
From 16/17 there will be a reduction in the annual pension allowance, tapered from the current £40,000. This will apply to individuals with income over £150,000. An added clause applies to prevent avoidance through salary sacrifice, therefore within the £150,000 includes employer pension contributions.
In summary, the £40,000 allowance reduces by £1 for every £2 over the £150,000 threshold. Anyone with £210,000 adjusted income, or over, will receive just £10,000 annual allowance, which is the minimum set limit.
There is also a reminder that the Lifetime Allowance reduces to £1 million in 2016, down from £1.25 million.
Read more: Doctors and dentists face pension choices
New State Pension rate
The basic State Pension will increase to £119.30 per week, up £3.35, equalling £1,125 additional income for pensioners.
The promise to rise the State Pension in line with living costs still stands – based on the highest of CPI inflation, RPI inflation or the Bank Rate.
ISA’s
ISA limits remain the same for 16/17, being £15,240 for ISA’s and £4,080 for JISA’s.
From Autumn 2016, the government have now promised to extend the list of qualifying investments for the new Innovative Finance ISA – this will include debt security from crowd-funding platforms.
Regulations will also allow for a deceased person’s estate to continue to benefit from ISA tax breaks during administration.
Buy-to-let property – Stamp Duty Land Tax (SDLT)
Probably the most unexpected news from this Autumn Statement is the additional SDLT that will become due on second homes and buy-to-let properties.
Following the SDLT Reform in 2014, property purchasers have been saving thousands from the new tiered system. However, this initiative of adding 3% to all second property purchases is expected to earn The Treasury an extra £1 billion by 2021. There are promises that up to £60 million of this “pot” will be plugged back into helping homebuyers.
ACTION – If you are considering a Buy-to-Let investment or purchasing a second home then there is a window between now and April 2016 to avoid the additional SDLT.
Help to buy scheme extended
Help-to-buy, which has helped over 50,000 people get onto the property ladder, will be extended nation-wide for another year, to 2021. In London, Help-to-buy applicants will have to raise 5% deposit to gain a loan for up to 40% of the property value, compared to the current 20% in the rest of the UK.
Further housing announcements were made too.
Read more: Download our full Autumn Statement Summary
Capital Gains Tax (CGT) payment date
The payment date of CGT has changed to 30 days from the sale of an asset, that is liable for CGT. This won’t include any residential properties that are the principal private residence, i.e. your home. It would include tax due on gains made from the sale of second homes, buy-to-let investments and inherited property.
Before you go…
Don’t forget to download our full 2015 Autumn Statement Summary and Spending Review for all the news.
Dental & Medical Financial Services keep up-to-date with major financial events such as the Autumn Statement and ensure our customers are given the guidance they need following. Call to discuss your situation with one of the team.
Tel: 01403 780 770