Yesterday the Chancellor George Osborne set out his financial plans ahead of next year’s general election. The proposals included a number of measures which will impact on the personal finances of tax payers in Britain. The team at Shepherd and Wedderburn cast their eyes over the Chancellor’s statement and what it means:

Shepherd and Wedderburn Financial’s Sarah Tory, a personal financial advisor, welcomed the proposals on tax. She said:

“The good news is we have seen confirmation of a rise in the higher rate tax band for the first time in five years. While it is a very modest one, it does go some way to adding weight to the aspiration to get it to the £50,000 level. With the personal tax allowance increasing to £10,600 it means that someone earning up to the new higher rate threshold of £42,385 will be up to £825 per annum better off than last year. It is also good news though for those looking to take advantage of the new pension freedoms as it stretches the 20% income tax band a little further.”

Other proposals which made an impact at the dispatch box related to ISAs and pensions. Tory, welcoming the move which she believes rewards families who save, added:

“It was good news too for ISA savers as a spouse can now inherit their partner’s hard-earned tax efficient savings pot on death and keep it within this tax efficient wrapper. There was also a further announcement in relation to pensions, and from April 2015 joint life or guaranteed annuities too can be passed tax free if death occurs before the age of 75. This is a statement to the electorate that they believe in rewarding families who save hard and take ownership of their own financial future. These are good and positive steps that dovetail in nicely with the recent pension reforms.”

The main headline created from the statement was the Chancellor’s announcement to reform Stamp Duty Land Tax in relation to residential property. Commenting on the impact of the proposed changes, Douglas Sinclair from Shepherd and Wedderburn’s Private Client team said:

“The Chancellor’s proposals on stamp duty means that the system in operation in England and Wales will be similar to the new Scottish Land and Buildings Transaction Tax. The rate applying on a purchase price of between £250,001 and £925,000 will be 5%, which is half the rate for the similar band in Scotland. Stamp Duty will now be tiered and therefore 98% of buyers will see a reduction in the duty payable. For a property purchase of £290,000 the previous rules would have meant tax payable of £8,700, whereas the new announcement will see this reduce to £4,500. This is a welcome reduction for most home buyers, although I suspect houses on the border of England and Scotland may well be affected, due to the higher rates applying in Scotland.”

From a personal finance perspective a final note is the announcement of further detail about Pensioner Bonds. They will be available to savers over the age of 65 and allow investments up to £10,000 per person and will pay net interest annually – the rate of interest is due to be announced next week. Tory added:

“National Savings and Investments have been light on attractive products lately so this one may be one to watch out for. Their rates are generally a lot more attractive than those available to savers through banks and building societies however they are limited in the amount that can be deposited so I predict a stampede."