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What the Autumn Statement means for your finances

Chancellor George Osborne managed to pack more surprises than usual into this week’s Autumn Statement. The biggest headline-grabber was the U-turn on the tax-credit reforms that had been announced just four months earlier in the Summer Budget

A dramatic increase in forecast Treasury tax receipts over the rest of the parliament means that such drastic – and evidently unpopular – welfare cuts are no longer necessary.

Buy-to-let crackdown?

But several of Osborne’s other new policies have raised considerable interest – not least the continuation of what looks a lot like a government crackdown on the buy-to-let sector. Earlier this year, the Bank of England warned of the possible threat to the UK’s economic stability posed by the recent very rapid growth in buy-to-let.

The Bank said that landlords could, for example, be particularly vulnerable to any sustained fall in house prices. Subsequently, Osborne said in his July Budget that mortgage interest tax relief for landlords who are higher-rate taxpayers would be phased out from 2017. This week, he unveiled a policy which could have a much more dramatic effect: from next April, anyone buying property for buy-to-let as well as holiday or second homes will face considerably higher stamp duty bills.

New rules for capital gains tax liability

Such purchases will pay the tax at 3 percentage points above the standard residential rate. So, for example, a home bought for £200,000 today would incur a £1,500 stamp duty bill. Under the new system, however, this would rise to £6,300. For a £300,000 house, a landlord would face a tax increase from £5,000 to £12,800.

To make life even more tricky for owners of second homes, new rules mean that any capital gains tax liability resulting from the profitable sale of a property will have to be settled within 30 days of completion rather than at the end of the current tax year – although this change does not come into effect until 2019.

Housebuilding and Help To Buy

These policies are not solely aimed at cooling the buy-to-let sector: Osborne recognises that high demand from would-be landlords is a significant factor behind recent rises in house prices and is one of the reasons so many young people are finding it impossible to get onto the property ladder. A number of other measures have been announced to address a lack of housing supply: the government is to embark on a new programme of housebuilding, and a new element of the state-backed Help To Buy mortgage scheme is being introduced in London.

State pension rise

The Autumn Statement confirmed that the basic state pension would rise from £115.95 a week to £119.30 on April 6, while the starting “full” rate for the new simplified state pension, which is introduced on the same date, will be £155.65.

Ups and downs for council tax, gas bills and motor insurance premiums

Local authorities will be given the power to raise council tax bills by up to 2% to cover the rising cost of providing social care to older residents. Meanwhile, reforms to green taxes on energy companies could see the typical household gas and electricity bill fall by around £30 a year from 2017. And a crackdown on whiplash claims following motor accidents could save drivers £50 a year on motor premiums.

Expanded scope for the IFISA

Finally, the Treasury says it is going to expand the scope of the new Innovative Finance ISA, which is launched on April 6 and will allow P2P lenders to avoid income tax on their interest payments.

From next autumn, other types of crowdfunded debt, such as debt securities issued by companies, will also be allowed in the IFISA. Ministers say they are considering allowing equity crowdfunding to be included as well.