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The growth forecast for this year has been increased from 0.6% to 1.4% and for next year from 1.8% to 2.4%; with the following three years set average at 2.5%, thus giving the chancellor far more flexibility in what he can do.

So what does the chancellor’s latest statement mean for you?- The key points:

 

Working for longer
George Osbourne, Chancellor of the Exchequer, Shrewsbury Accountants

George Osbourne, Chancellor of the Exchequer

Not people who have passed 57 but pretty well everybody else. With improving life expectancy, the state pension age will be rising to 66 by 2020, 67 by 2028 and 68 by 2036. This will mean that millions more people will retire later.

Thereafter, the state pension age will rise in line with longevity, so individuals now in their 30s will probably work to 69 and those in their 20s are likely to have to soldier on to the age of 70.

Existing pensioners

As predicted, there will be a rise of 2.7% in the state pension in April, or £2.95 a week. Additionally, individuals can now make voluntary National Insurance contributions, if they had gaps in their working life, to ensure they get more state pension.

Other benefits

Other than pensions, most of the other benefits will only rise by 1% next April, lower than the rising cost of living. There will also be a cap on welfare spending starting next year, with the sole exceptions of the state pension and jobseeker’s allowance.

Young people aged 18 to 21 who claim benefits without basic English or Maths will be required to undertake training from day one or lose their entitlement. Others, unemployed for more than six months, will be required to start a traineeship, take work experience or do a community work placement or lose benefits.

Help for families

Mr Osborne confirmed plans for free school meals for infants, for their first 3 years at school.

There will also be a tax break for about four million married couples, with £1,000 of personal allowance able to be transferred from one spouse to another.

He also confirmed that energy bills would not rise as much as expected with a change to green levies, giving an average saving of around £70p.a..

Transport

As expected, the chancellor has cancelled next year’s fuel duty rise, saving drivers two pence a litre. He also said that the tax disc to show motorists have paid vehicle excise duty is to be replaced with an electronic system and from next year you will be able to pay by monthly direct debit rather than with a payment every year or six months.

The planned rise in air passenger duty has also been cancelled.

The annual rise in train fares will now only go up in line with the cost of living.

Housing market

George Osborne announced that people living overseas will have to pay Capital Gains Tax (CGT) for future gains on second homes bought in the UK from April 2015. At present, they do not pay CGT in this way, unlike UK residents.

johnny-vegas in benidorm wearing a union jack cap with two beer bottles plus straw

British Ex-Pats will have to pay Capital Gains Tax

For UK residents, the concession of the last three years before selling a second home being disregarded when calculating a CGT bill, is to be cut to 18 months, assuming they once lived in the property.

He also said there would be £1bn of loans made to unblock large housing developments, such as a regeneration plan in Manchester to build 2,500 new homes.

Also, if you live in social housing, you will now move to the top of the list if you are moving for a job.

SME’s (Small to medium sizes businesses)

Business rates will now be limited to 2%, instead of being linked to inflation and business rate relief for small firms will be extended until April 2015.

There was also an announcement that businesses moving into vacant high-street properties will have their rates cut by 50%.

And the big announcement and the one which is likely to see thousands of unemployed teenagers getting a job is employers will now not have to pay National Insurance contributions when employing younger workers. At present NIC is payable from age 16, but will now be delayed to age 21; additionally, an extra 20,000 apprenticeships are to be funded over the next two years.

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David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David’s depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire’s most respected Accountancy Practice. Email David