Autumn statement 2012.

6th December 2012

The Chancellor has revealed the autumn statement 2012, in which he proposes to reduce the Annual Allowance and Lifetime Allowance limits for pension savings, but has increased ISA allowances and the Inheritance Tax threshold.

In summary, please see as follows:

Income Tax thresholds

• Personal allowance threshold is to be raised by £235 more than previously announced for next year, which means income tax will not be paid until earnings hit £9,440
• Threshold for 40% rate of income tax to rise by 1% in 2014 and 2015, from £41,450 to £41,865 and then £42,285

Inheritance Tax

• It is proposed that the inheritance tax threshold will remain at its current level of £325,000 until April 2015.  For the 2015/16 tax year the band will be increased by 1% to £329,000

ISA contribution limits

• ISA contribution limits are to be raised to £11,520 from April 2013 and the Junior ISA subscription limit will be increased to £3,720

State Pensions

• Basic state pension to rise by 2.5% next year to £110.15 a week

Pension Savings

• It is proposed that from 2014/2015, the Lifetime Allowance for pension contributions will be reduced from £1.5 million to £1.25 million.  A transitional ‘fixed protection’ regime will be introduced for those who believe they may be affected by the reduction.
• The Annual Allowance on which pension contributions will receive tax relief will be reduced from £50,000 to £40,000
• The drawdown limit for individuals in Capped Income Drawdown has been increased from 100% to 120% of the amount that could be provided from an annuity.  The increase will take effect from 6 April 2013
• Those eligible for Flexible Drawdown will not be affected by the change as they will continue to be able to draw up to 100% of their fund as an income

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