I have noted some of the key points from last week’s autumn statement:
Basic State Pension: The (full rate) Basic State Pension will increase to £113.10 from April 2014 in line with the triple-lock guarantee.
State Pension Age: There will be a new approach to future reviews of state pension age to reflect changes in life expectancy. We’ve already seen the rises to 66, then 67, brought forward to 2020 and 2028. Expectations have now been set for further rises to 68 by “the mid 2030s” then 69 by “the late 2040s”.
Topping-up state pension: Those reaching state pension age before the new single tier state pension starts in April 2016 will also have an option to pay extra (new Class 3A) voluntary National Insurance contributions to boost their Additional State Pension. Details of this new option, which will only be available for a limited period from October 2015, are awaited.
As previously announced the personal allowance will increase by £560 to £10,000 in 2014/15. This means there will be more tax-free income for many basic rate taxpayers.However, the basic rate band will contract from £32,010 to £31,865, meaning that some may become higher rate taxpayers for the first time.
Those who make an individual pension contribution will increase their basic rate band, and could potentially take income out of higher rate tax again.
Non-taxpayers who are married or in a civil partnership can pass up to £1,000 of their personal allowance to their basic rate tax paying spouse/partner in 2015/16. It will mean an extra £200 tax-free income for couples who can use it. Around four million families could benefit but its success will depend on how easy it is to claim.
ISA allowances will be increased to £11,880 in 2014/15 (half of which can be saved in a cash ISA). The Junior ISA and Child Trust Fund limits will both be increased to £3,840. But there is no news yet on whether it will be possible for the 4.1 million children with a Child Trust Fund to transfer to a JISA.