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Budget 2014 - what you need to know

24 March 2014

"I play bingo, and even call the numbers"
- George Osborne

 

While social media has been caught up by ’Bingo-gate’, here at Springfords we’ve been focusing on the numbers that matter, to our clients, their businesses and families. 

On the day when a new £1 coin was officially unveiled, there were of course plenty of other important changes announced.   As ever, the finer details will emerge over the next few weeks. For now, here are the ‘at a glance’ headlines for the 2014 Budget:

What we already knew would happen from 6 April 2014 –

•    Basic rate of income tax – on first £31,865 of taxable income, at a rate of 20%.
•    Higher rate of income tax – at 40% on taxable income between £31,865 and £150,000, and 45% on the
     excess (32.5% and 37.5% on dividend income).
•    Personal allowances – to increase to £10,000.
•    Corporation tax rate – full rate reduces to 21%, and to 20% from April 2015.
•    National insurance – the NIC employment allowance of £2,000 begins, reducing employer costs.
•    Capital gains tax – the ‘36 month PPR rule’ reduces to 18 months.

 

Some of the new measures and proposals announced in the Budget speech were:

•    Pensions – a number of minor changes will apply from 27 March, but the most interesting proposal is
     that, from April 2015, there will be much greater flexibility in how defined contribution pensions can
     be accessed, with pension income being taxed at marginal income tax rates, rather than the 55%
     hit which can apply at present.
•    Annual Investment Allowance – this valuable relief for businesses has been doubled
     to £500,000 from April 2014, and will apply to expenditure incurred up to 31 December 2015.
•    Class 2 National Insurance – from April 2016, this will be collected via self assessment,
     rather than by separate direct debit payments.
•    IHT – emergency service workers who die in active service will not be subject to IHT, similar
     to the exemption currently available to armed forces personnel.
•    Research & Development Tax Credit – the tax credit available to small and medium sized
     companies will increase from 11% to 14.5% from April 2014.
•    Annual Tax on Enveloped Dwellings – changes being phased in from April 2015 will see companies
     who own UK residential property worth more than £500,000 (reduced from £2 million) becoming subject
     to this tax charge.
•    Stamp Duty Land Tax – the SDLT rate of 15% currently applying to Enveloped Dwellings valued at
     more than £2 million has been extended to properties valued at £500,000 with immediate effect.
•    ISAs – ‘stocks and shares’ and ‘cash’ ISAs will be merged from July 2014 to become NISAs (New ISAs)
     with an annual maximum savings limit of £15,000.
•    Seed EIS – the temporary SEIS regime which allows income and capital gains tax efficient investments
     of up to £100,000 to be made in young companies is to be permanently extended from April 2014.
•    10% tax band – from April 2015, the 10% savings rate will be abolished.  This will be beneficial for those
      with income of less than £15,500 who will not suffer income tax on their savings income.    

 

It was a ‘full house’ in the Commons as the 2014 Budget unfolded.  Did your numbers come up this year? Are you ‘Kelly’s eye’ when it comes to keeping on top of your tax affairs?  If you’d like to find out more about the 2014 Budget, and how it might affect you, please get in touch with your usual Springfords contact.  

Why not download our current Tax Card, or go to our website where you can see all the latest news and information.  Don’t forget to install the Springfords app (available free from your app store and on our website) so you can keep up to date on the move. 

This is a general guide which is intended to give background information and is not a substitute for taking specific advice based on your particular circumstances.

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