The Chancellor, George Osborne, has now presented his March 2014 Budget to Parliament. There was lots of talk about the economy, growth forecasts, supporting UK businesses and employment – as well as some obvious political spin bearing in mind the European and General Elections are just around the corner – however we thought we’d concentrate on the most important changes, mainly in relation to tax itself as that’s what is going to affect Taxfile customers and readers the most. So here is our snapshot:
- The threshold before earnings are subject to income tax (the ‘tax-free personal allowance’) is set to rise to £10,500;
- The higher rate of tax will kick in for earnings above £41,865 from April 2014, rising again to £42,285 in 2015;
- The first part of the ‘Help to Buy’ equity loan scheme for those aspiring to buy a new home is to be extended until 2020 (previously 2016);
- The Stamp Duty on homes worth over £500k is to increase to 15% for those which are bought by companies;
- Inheritance tax will be scrapped for members of the emergency services who “give their lives protecting us”;
- Cash and Shares ISAs will be merged into a single New ISA (“NISA”). The annual tax-free limit for the NISA will be £15k (£4k for junior equivalent) from 1 July 2014.
- From April 2015, pensioners will no longer be forced to buy an annuity with their pension fund. They will now be able to cash in as much or as little as they want to from their pension pot.
- From June 2014, the amount people will be able to invest into Premium Bonds will increase to £40k (from £30k). From 2015 this will rise again to £50k.
- The number of £1m Premium Bonds winners will double;
- The duty on beer is to decrease by 1 penny per pint and duty on cider and spirits is unchanged;
- The above inflation duty escalator for wine is to be abolished;
- There will be a rise of 2% above inflation for the duty on cigarettes;
- The maximum Tax-Free Childcare support available is to increase to £2000 per year per child;
- The Air Passenger Duty will be reformed by abolishing the top two bands so that all long-haul flights are taxed the same way as those to the USA.
- £200m extra will be available to establish a pothole repairs ‘challenge fund’;
- £140m extra will be available for flood defence repairs and maintenance;
- A new, highly secure, £1 coin will be introduced in 2017. Using new Royal Mint anti-counterfeiting technology the new coin will have 12 sides and will be bi-metallic.
- Corporation tax is to be cut to 20% by April 2015;
- The ‘Carbon Floor’ price paid by businesses is to be frozen;
- The Annual Investment Allowance (AIA) has doubled to £500k, running to the end of 2015;
- Also doubling (to £3 billion) is the amount that the Government will give as credit in support of overseas sales. The interest rate for that credit will also be decreased;
- Energy costs for businesses will be cut.
As you can see the most radical changes are in relation to ISAs and pensions – both welcome changes in our view because pensioners and others relying on savings for an income have been penalised via historically low interest rates for way too long.
If you require any help with your tax affairs and accountancy-related matters, please do contact us here at Taxfile and we’ll be happy to help (or call us direct on 020 8761 8000).