Stamp duty as we've come to know it has been completely overhauled today by Chancellor George Osborne as he delivered his Autumn Statement.
From midnight tonight, new rules will come into force, reducing the tax payable on an average family home costing £275,000 by some £4,500.
George Osborne has abolished the "slab system" for paying stamp duty on property.
For many years stamp duty has been charged at 1% for properties worth between £125,001 and £250,000, and then 3% on properties worth £250,001 to £500,000. That meant a stamp duty bill of £2,500 on a £250,000 home but £7,500 for one worth £250,001.
The thresholds were set by Gordon Brown in 1997 and have been in place ever since, despite house prices rising significantly during that time. The average house price in England and Wales has risen by over 200% since 1997 according to Nationwide house price data up from £62,037 to £189,388 in November 2014.
From midnight on Wednesday 3 December, a 2% charge will be levied on the portion of a property value between £125,001 and £250,000. A 5% charge will then apply to the portion of value that exceeds £250,000 up to £925,000. Between £925,001 and £1.5 million, a 10% charge will apply and for everything above £1.5 million a 12% charge will apply.
Other good news includes an uplift in the personal allowance, the amount of money you can earn before you have to pay income tax. The Chancellor announced that the personal allowance will rise to £10,600 in April rather than the planned £10,500.
Osborne added that he hoped he would be able to raise the threshold further to £12,500 by 2020.
The level of earnings at which the higher-rate income tax of 40% kicks in will rise in April to £42,385 from £41,865.
Increased ISA limits
This limit will be raised to £15,240 in April.
At present, any savings in an Isa lose their tax-free status when somebody dies and their spouse starts paying tax on those savings.
The chancellor said that, with immediate effect, when someone dies, their husband or wife will be able to inherit their ISA and keep its tax-free status. The change will affect 150,000 married partners who die each year.
New Pensioner Bonds
Next week, the over-65s will hear what the rates are to be offered with the new Pensioner Bond that will be available from January.
It has been suggested that rates could be 2.8% for a one-year bond and 4% for a three-year bond.
Thousands of retirees who have pension annuities will be able to pass on the benefits free of tax.
From 6 April 2015, surviving beneficiaries of joint life annuities and the recipients of guaranteed annuity benefits will no longer have to pay tax on the payments, if the original policyholder died before turning 75. From a tax point of view the move puts annuities on an equal footing with income drawdown, following a previous announcement to scrap death taxes of 55% on these plans.
The Chancellor used his Autumn Statement to announce that an existing exemption from paying national insurance on apprentices under 21 will be extended to those aged under 25. Employers who take on young apprentices will no longer have to pay national insurance. Employee will still be liable to tax and employee’s National Insurance as normal.
The rules are planned to come into effect from April 2016. Employer’s National Insurance Contributions up to the upper earnings limit for apprentices aged under 25 will be abolished.