The Chancellor’s Budget, March 2014

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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:

For individuals:

  • 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 Read more

PBR 2009 and the taxpayer

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The 2009 Pre-Budget Report was published on 9 December 2009. The Report covers a lot of issues but we will only focus on the ones affecting self employed individuals.

According to the Pre-Budget Report 2009, the tax rates and thresholds for the year ended on 5th April 2011 will remain the same as the ones for the current tax year. The same principle will apply to National Insurance Contributions rates and thresholds in 2010/2011.

But “for the tax year 2011/12, in addition to the 0.5% increases to rates already announced at PBR 2008, the Chancellor has announced that there will be a further 0.5% increase to those rates, making a 1% increase in total from 6 April 2011. The primary threshold and lower profits limit will be increased by £570 to compensate the lowest earners.”(HM Revenue and Customs).

The Child element when calculating the CTC entitlement will increase from the current £2235 p.a. to £2300 p.a while the disabled elements will increase by 1.5%.

Also, all elements of the WTC (except the childcare element) will increase by 1.5% in 2010/2011.

The income threshold for those claiming CTC rises from 2010/2011 to £16,190.

The inheritance tax threshold will be frozen at the current level of £325,000 from the tax year 2010/2011.

For any other details to do with the Pre-Budget Report 2009 please visit HMRC.

Darling’s 2009 Budget

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On Wednesday of this week Chancellor of the Exchequer, Alistair Darling gave the Budget.
We would like to present you some of the main points of the Budget:
• VAT: the VAT rate, now 15%, will return back to the standard rate of 17.5% from 1st January 2010.
• Companies’ loss carry back for business: this will affect all companies making losses from carrying on trades, professions or vocations this is normally referred to as trading losses. This legislation will be introduced in Finance Bill 2009 to extend the ability of businesses to carry trading losses back against profits of earlier years to get a repayment of tax, due to the current turbulence of the financial markets.
• Capital Allowances (Plant and Machinery: Temporary first year allowances): This will most likely affect businesses investing in plant and machinery between April 2009 – April 2010. This legislation also in the Finance Bill 2009 will introduce a new temporary 40% first year allowance (FYA) for the expenditure on plant and machinery that would normally be allocated to the main capital allowance pool.
•Income tax: You will now be taxed a shocking 50% if you earn over £150,000
•Child Benefits: Child Benefits will be increased by £20 by 2010.
So from 2010 your eldest child would get £40.00 and any child after that would get £33.20, and guardians allowance would be £34.10.
• Child trust funds: Trust funds for disabled children would increase by £100 and by £200 for those severely disabled.
•ISA’s: This will affect the savers, as Alistair Darling made the decision to raise the tax-free ISA limit to £10,200, although those over 50 years-old will benefit this tax year. The rest of us will get this benefit the following one.
If you would like to know more about Alistair Darling’s Budget, Taxfile recommends you following this link.