Autumn Statement 2013: what can we expect from George Osborne

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George Osborne

George Osborne's Christmas present to the nation, the 2013 Autumn Statement, is due on Thursday, December 5. Last year there was so much packed into the speech that it was like a second budget. This year commentators are hoping for something less dramatic.

But what can we expect?


Pensions

The big news that emerged last night is that Osborne will outline changes to the state pension age, which will mean that anyone in their 40s - or younger - will get their pension later than they expected.

We already knew that state pension age will rise to 66 in 2020 and 67 in 2028. This will not change. However, the rise to age 68 will be brought forward to the early 2030s (a decade earlier than expected) affecting people in their late 40s.

After that, an increase to 69 is expected in the mid 2040s (again a decade earlier than we thought), which could affect those in their late 30s. Then an increase to 70 is likely in the 2050s – affecting people in their 20s.

This is expected to be done in line with rising life expectancy. The idea will to maintain the current position - where a typical person will receive a state pension for around a third of their lives. It would also save the government £400 billion in the next 50 years.

We already know

The rest of the big announcements are likely to fall into three categories. First there are promises already made by the government, which we can expect more clarity on.

During the Conservative Party conference we were promised a married couples and civil partners tax break from April 2015, allowing £1,000 of personal allowance to be transferred between spouses, saving them up to £200 a year in tax.

Also at the conference the government announced that there will be free school meals for all infant pupils at state schools in England from next September.

And Osborne pledged to freeze fuel duty, so there will be more on this.

More recently, the government has outlined plans to change some of the green levies in energy bills in order to offset price rises. This will reduce the cost of bills by around £50 a year, and we are likely to hear more about this.

How will he pay for it?

We don't yet know how any of this will be paid for. Osborne has pledged to balance the books, so we know there will be pain to come from somewhere.

This brings us to the second category of announcements: the suggestions for how George Osborne will claw the money back.

It's likely that Osborne will clamp down harder on tax avoidance, because that's a vote-winning way to get some money back in the coffers, but whether this will be enough is up for debate.

There may also be a capital gains tax on the sale of properties owned by foreign nationals in the UK.
And there is a rumour that tax relief on mortgage interest payments could be scrapped for buy-to-let landlords.

There is speculation that Osborne could bring in a lifetime cap on the lifetime total that people can invest in an ISA. A figure of £100,000 is being bandied about. However, there are plenty of commentators who think this is highly unlikely given Osborne's support for raising ISA limits - added to which those who have taken full advantage from the outset may well already have more than this in their ISAs.

And there are predictions that there could be a limit to tax free cash on pensions. This could be a major problem for those who were relying on a lump sum to fund an early retirement or pay off an interest-only mortgage. However, some commentators believe this is very unlikely, as the Treasury is under incredible pressure to stop mucking about with pensions.



More giveaways?

The third category of predictions is another set of giveaways that are being bandied about in the press.

There have been leaked reports that business rate rises will be capped at 2% rather than rising with inflation, in an effort to support local shops. There may also be an extension to rate relief for smaller businesses.

There is also talk about the personal tax allowance. There is already going to be an increase in the personal tax allowance to £10,000 in April next year - which means everyone but the highest-paid will be able to earn £10,000 before they are taxed at all. Going forward, this allowance is supposed to rise in pace with inflation. However, there are rumours of a possible rise to £10,500 in April 2015 or 2016.

There have been lots of calls to reform stamp duty. The ACCA says there is talk of scrapping it on all homes worth less than £500,000. Meanwhile PWC called for the 3% tax to be cut on homes worth between £250,000 and £300,000 - which struggle to sell once the 3% tax kicks in. However, there is no widespread belief that this will be implemented this time round.

What would you like to see the Chancellor announce tomorrow? Let us know in the comments.

Where are Britain's highest tax bills?

Where are Britain's highest tax bills?