Tax breaks for workers
The tax-free personal allowance will be increased by £100 in April 2015, to £10,600. Chancellor George Osborne has announced that it is the first step towards the new goal of raising the personal allowance to £12,500, so that people working full-time on the minimum wage will pay no tax at all.
The good news is that, unlike previous increases in the personal allowance threshold, this increase will be passed on in full to higher-rate taxpayers paying 40% tax.
So the higher-rate threshold will go from £41,865 this year to £42,385 next year. That is the first increase in the higher-rate threshold in line with inflation for five years.
The death tax dies
Good news for pensions and the hated 55% ‘death tax’. Osborne has confirmed that the 55% death tax that currently applies when you pass an unused pension pot on to your loved ones will be abolished, so people will be able to pass on their pensions to their families tax-free. This will also apply to people who die before the age of 75 with a joint-life or guaranteed-term annuity. They can pass that on tax-free too.
ISAs are more enduring
The £15,000 New ISAs have been popular, according to the chancellor, and, from next April, the limit will increase to £15,240. But the really good news is this: at the moment, when someone dies, the savings in their ISA lose their tax-free status and their spouse or civil partner starts paying tax on that money. But now, when someone dies, their husband, wife or civil partner will be able to inherit their ISA and keep its tax-free status.