Highlights from the Autumn Statement
The Chancellor's third set piece of last year was almost another Budget.
After a Budget in March and another in July, it might have been thought that Mr Osborne would have little new to say in his Autumn Statement, but this proved not to be the case in two important areas.
Tax and additional homes
In his July Budget the Chancellor announced two measures aimed at individual investors in the buy-to-let market and the Autumn Statement added two more.
From 1 April 2016 the rates of stamp duty land tax (SDLT) on the purchase of additional properties (e.g. buy-to-let or second homes) will increase by 3%. As a result, a property costing around the average UK price of £200,000 will be subject to £1,500 SDLT if you are a homebuyer, but £7,500 if you are a buy-to-let investor. SDLT does not apply in Scotland but the same change will apply on Scotland's Land and Building Transaction Tax.
The extra up-front tax will eat into capital gains, but if you do make a profit, then from April 2019, the Treasury will want you to pay any capital gains tax (CGT) due on account within 30 days of the sale, rather than up to 22 months, as at present.
In the space of four months, the Chancellor has made buy-to-let investing a much less attractive option for individual investors.
Automatic pension enrolment
The Chancellor's interest in reducing the cost of tax relief on pension contributions was confirmed by an unexpected change to auto-enrolment rules. The minimum contribution rate was due to rise from 2% of qualifying earnings (those between £5,824 and £42,385 in 2015/16) to 5% in October 2017 and 8% in October 2018. Instead each of the uplifts will now take place in the following April. In his speech Mr Osborne said the move was to "help business with administration" by aligning the change with the tax years, but failed to mention the £840m of savings in tax relief over the two years concerned.
The chairman of one major pension body echoed the thoughts of many experts when he said that delaying auto-enrolment phasing dates bodes ill for [the] survival of [the] pension tax relief system.
The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice. Occupational pension schemes are regulated by The Pensions Regulator.