Budget 2014

On Wednesday 19th March 2014, Chancellor George Osbourne gave his 2014 Budget speech, announcing several new tax and economic measures. The main points of the budget, as well as some points from the previous year budget and Autumn statement, are summarised below:

Personal Tax
• An increase in the personal allowance for 2015/16 from £10,000 to £10,500.
• An increase in the higher rate tax band for 2015/16 from £41,865 to £42,285.
• Transferrable marriage allowance of £1,000 to increase to £1,050 from 2015/16, and to remain 10% of personal allowance.

Business Tax
• The main rate of corporation tax is to reduce to 20% from 1 April 2015, with the small company rate remaining at 20%.
• Annual Investment Allowance to increase to £500,000 from 1st April 2014 until 31st December 2015.

Savings & Pensions
• Abolition of 10% starting rate, and an increase of 0% band from £2,880 to £5,000 from 6th April 2015.
• The overall annual ISA subscription to increase to £15,000 from 1st July 2014 for either cash or stocks & shares ISAs – there can now be any combination of the two.
• The annual subscription for Junior ISAs & Child Trust Funds to increase to £4,000 from 1st July 2014.
• All tax restrictions on pensioners’ access to their pension pots to be removed.

Capital Gains Tax & Inheritance Tax
• Reduction in final period exemption for private residence relief from 36 months to 18 months.
• Annual exempt amount to increase to £11,000 from 2014/15, then £11,100 from 2015/16.
• The IHT nil rate band will be frozen at £325,000 until 5th April 2018.
• IHT will be waived for those in emergency services who give their lives in the course of duty.

Employment Tax
• The Government is to introduce an employment allowance of up to £2,000 for all business and charities to offset against their employer Class 1 National Insurance Liability from April 2014
• An increase in the tax free loan allowance to employees/directors from £5,000 to £10,000
• Fuel & Van benefit charges to increase by RPI.
• Percentage threshold scheme to be abolished from 2014/15, meaning statutory sick pay cannot be reclaimed from H M Revenue & Customs but must still be paid when necessary.
• From 6 April 2015 every employer with employees under the age of 21 will no longer be required to pay Class 1 secondary National Insurance contributions (NICs) on earnings up to the upper earning limit (UEL), for those employees.

VAT
• The VAT registration threshold is to increase to £81,000 from £79,000, with the deregistration threshold increasing to £79,000 from 1st April 2014.
• The VAT treatment of discounted invoices will change – the VAT will be calculated on the amount actually paid from 1st April 2015, and on supplies of telecommunication & broadcasting services to consumers from 1st May 2014.

Other Taxes
• Companies purchasing residential property worth over £500,000 will face Stamp Duty Land Tax of 15%.
• Class 2 National Insurance Contributions for the self employed to be collected via Self Assessment from April 2016.

Please contact us for further information on how both the Budget and the Autumn Statement will affect you and your business.

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