What’s new for older people in the Autumn Statement 2014?
The UK Chancellor of the Exchequer has updated some of the financial rules around tax, pensions and savings in his latest statement. We provide a round-up of some of the key changes that might affect our parents.
Starting rate of tax for savings income
From 6 April 2015 the starting rate will reduce from 10% to nil and the maximum amount of eligible savings income will increase to £5,000 from £2,880.
Transferable Tax Allowance
From 6 April 2015 married couples and civil partners may be eligible to transfer 10% of their tax allowance to the other partner. The option will be available to couples where neither pays tax at the higher or additional rate.
New Individual Savings Accounts (NISAs)
From 6 April 2015 the NISA savings limit will increase to £15,240.
An additional ISA allowance will be introduced for spouses or civil partners when an ISA saver dies. For deaths from 3 December 2014 surviving spouses will be able to invest the inherited funds into their own ISA on top of their usual allowance.
Access to pension funds
From 6 April 2015 there will be total freedom to access a pension fund from the age of 55. 25% will be tax free with the remainder taxable as income.
New rules are proposed to reduce tax relief on pension contributions in years where income is taken from the fund.
Private Residence Relief
From 6 April 2015 a person will not be eligible for PRR on gains made on UK residential property unless the person was resident in the same country as the property for that tax year, or spent at least 90 midnights in the property.
IHT and pension funds
Under the new system anyone who dies under the age of 75 will be able to give their remaining defined contribution pension fund to anyone completely tax free.
For those aged 75 or over the fund can be passed to any beneficiary who will be able to draw down on it as income at their marginal rate of income tax.
Devolved powers to Scottish Parliament
The UK government will publish draft clauses in January 2015 which will devolve power to the Scottish Parliament to set income tax rates and thresholds for the non-savings and non-dividend income of Scottish taxpayers.
Find out more:
Overview of the Autumn Statement from the government
The UK government view on creating a simpler, fairer tax
More explanation on changes to income tax
Visit our finance and legal pages for advice on views on managing your parents’ finances effectively including how to claim a lost pension and how trusts can help to protect assets.
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