The 2014 Budget had a few highlights but there was very little for business (certainly the SME market), but a number of small positives for individuals which is not unexpected in the year before an election. In summary:
For individuals
- Personal allowance will reach £10,000 in April and next year April 2015 it will rise to £10,500
- Higher rate threshold will rise by 1% from £41,450 to £41,865 next month and by a further 1% £42,285 next year – a small giveaway having been eroded over the last few years as the personal allowance has increased
- The 10p tax rate for savers abolished
- Cash and shares Isas to be merged into a single New Isa with annual tax-free savings limit of £15,000 from 1 July
- Help to buy scheme to be extended to end of the decade – surprising as many have said that this is excessively boosting the housing market
- All tax restrictions on pensioners’ access to their pension pots to be removed, ending the requirement to buy an annuity – but with the risk that pension pots could be used up while the pensioner is still alive
For businesses
- Annual investment allowance (AIA) was due to expire this year, but will be extended to end of 2015 and increased to £500,000 – a welcome boost for businesses who were expecting to lose this, but of particular benefit to bigger businesses
- Business rates relief in enterprise zones to be extended by 3 years
- Corporation tax down to 21% in April, and will be 20% from April 2015 – this only affects larger businesses, SMEs tax rate is already 20%
- Collection of Class 2 NICs to move to self-assessment – a welcome simplification
Headline news
- Beer duty will be cut by 1p for second year running and duty on spirits will be frozen
- Tobacco duty will rise 2% above inflation and will continue to rise at this level until 2020
- Fuel duty will not rise in September
- Gambling machine duty to rise to 20%, Bingo duty will fall to 10%
- Britain first new Garden City in over 100 years to be build at Ebbsfleet – a major development near our offices and many clients
- No VAT on fuel for Air Ambulance and Lifeboat
The economy
- CPI inflation target to remain at 2% for Bank of England Monetary Policy Unit
- OBR expects the UK economy to reach the point, later this year, that it will be larger than it was before the economic crash
- UKTI support to be extended to help exports
- HMRC’s budget to be increased to tackle non-compliance
- Number of registered tax avoidance schemes has fallen by a half under this Government
There will be more detail released in the next few days, the proposed rules for partnerships will be carried into the finance bill without alteration and there may be technical changes on non-domiciled individuals. This is based on our understanding of the budget statement and you should seek professional advice before taking any steps based on the contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”