Follow this topicFollow this topic Knowledge » Politics and Finance

Autumn Statement 2012: what it means for you

Simon Ward
by Lovemoney Staff Simon Ward on 05 December 2012  |  Comments 9 comments

The Autumn Statement is done for another year. But what have George Osborne's decisions done to your bank balance?

Autumn Statement 2012: what it means for you

Chancellor George Osborne has delivered his 2012 Autumn Statement on the economy and public finances to Parliament. But what did he announce and how does it affect your money?

Income Tax

The Chancellor increased the threshold for the 40% higher rate of Income Tax from £41,450 to £41,865 in 2014 and then £42,285 in 2015. However, he admitted that this was a real-terms reduction due to the effects of inflation.

This was balanced by an extra £235 increase in the tax-free Income Tax threshold to £9,440 from April. The Government has continually pledged to raise the threshold to £10,000 by 2015.

Fuel duty

It was widely predicted that the Chancellor would postpone the 3p increase due to come in next month and that’s exactly what happened. The increase would have added £2.53 to the cost of filling up an average family car. That increase has been completely scrapped.

An increase planned for next April has been moved to September.

Pensions

The Basic State Pension will go up by £2.30 a week from April.

One of the most talked-about issues in the run-up to the Autumn Statement was the possibility of a cut in the pension tax relief limit for higher earners. And that’s indeed what happened as the annual limit was cut from £50,000 to £40,000, with the lifetime allowance cut from £1.5 million to £1.25 million.

As well as the tax it may generate, the Chancellor justified this by saying that the median pension contribution is £6,000 a year.

Experts have said that this decision has broken a Government promise not to cut the amount of relief until 2016 at the earliest.

Read Autumn Statement: Don't raid pensions, George for Ed Bowsher's thoughts on this.

Benefits

With the Government still very much in deficit, further welfare cuts were always likely. And that’s what happened, as most working-related benefits will only be increased by 1% from next April, rather than the 2.2% they were due to increase by.

However, Child Benefit will increase by 1% from April 2014.

Support for Mortgage Interest

After the credit crunch, the Government introduced Support for Mortgage Interest (SMI) payments to help borrowers cope with their repayments, and cut the threat of repossessions.

This help was due to be scaled back at the end of this year, but has instead been extended for another two years.

ISAs

The ISA allowance will be increased to £11,520 from next April, which is ahead of inflation, although only half of that amount can be saved in cash. There will also be a consultation on including shares in AIM-listed and other smaller market-listed companies in ISA offerings.

Capital Gains Tax

The Capital Gains tax threshold will be increased by 1% from April 2014.

Inheritance Tax

The Inheritance Tax threshold, currently frozen, will increase by 1% to £329,000 in April 2014.

More on Government policies

How to keep your Child Benefit

Government green plans to push energy bills up by £95

George Osborne proposes employee share schemes in return for rights

Benefit reform: all you need to know about the Universal Credit

Planning permission ditched for extensions and conservatories

Enjoyed this? Show it some love

Twitter
General

Comments (9)

  • tuttogallo
    Love rating 99
    tuttogallo said

    This is all tinkering around the edges. Expenditure needs to be cut drastically and more tax taken in. The deficit is not falling nearly fast enough and the overall national debt is charging ever upwards.The country simply cannot afford the twin burdens of the NHS and Social Security Benefits.

    If interest rates rise then the whole edifice of government finances will come crashing down and a Greek style situation will arise. Don't think it couldn't happen here. It can!

    Arblaster. The German phrase you are looking for is: Ge(heime) Sta(ats)po(lizei).

    Report on 08 December 2012  |  Love thisLove  0 loves
  • hopefultom
    Love rating 50
    hopefultom said

    tuttogallo

    Surely, this should read "the triple burdens of the NHS, Social Security benefits and tax avoiders/evaders "

    Although the word burden is true in the literal sense, I wonder if many would consider the NHS in that sense. I know that I, and my family have many reasons to be grateful to the NHS staff, in various departments in our area

    Report on 10 December 2012  |  Love thisLove  0 loves

Post a comment

Sign in or register to post a reply.

Our top deals

Credit card
company
Balance transfers rate and period Representative
APR
Apply
now

Barclaycard 31Mth Platinum Visa

0% for 31 months (2.99% fee) Representative 18.9% APR (variable) Apply
Representative example: Assumed borrowing of £1,200 for 1 year, at a Purchase Rate of 18.9% (variable), representative 18.9% APR (variable). Credit available subject to status. A Balance Transfer fee of 3.5% will be applied, then reduced to 2.99% by a refund (terms and conditions apply). Plus an additional £20 fee refund on balance transfers over £2000.

Barclaycard 30Mth Platinum Visa

0% for 30 months (2.89% fee) Representative 18.9% APR (variable) Apply
Representative example: Assumed borrowing of £1,200 for 1 year, at a Purchase Rate of 18.9% (variable), representative 18.9% APR (variable). Credit available subject to status. A Balance Transfer fee of 3.5% will be applied, then reduced to 2.89% by a refund (terms and conditions apply). Plus an additional £20 fee refund on balance transfers over £2000.

MBNA 30Mth Platinum Credit Card Visa

0% for 30 months (2.89% fee) Representative 18.9% APR (variable) Apply
Representative example: Assumed borrowing of £1,200 for 1 year, at a Purchase Rate of 18.9% (variable), representative 18.9% APR (variable). Credit available subject to status.
W3C  Thank you for using Three Kings