The Chancellors’ 2014 Budget speech focused on delivering a message of a UK economy growing at a faster rate than any other advanced economy. Encouraging news indeed!
The speech featured announcements of generous reliefs for the export, manufacturing and creative industries, reforms for access to personal pension funds and saving incentives . As a result the speech was framed by a reference to the Budget being one for the makers-doers-savers of the UK. The key points of interest to our clients, particularly from a tax perspective (of which there are few) are as follows:
- The Annual Tax on Enveloped Dwellings (“ATED”) which effectively penalises homes owned through a company is to be extended from residential properties worth more than £2m to those worth more than £500K. This will be introduced in two stages, with £1M+ properties caught from 1 April 2015 and £500K+ properties from 1 April 2016. In addition the higher rate of Stamp Duty Land Tax of 15% which applies to £2M properties acquired by “non-natural persons” will see its threshold reduced to £500K from 20 March 2014.
- Cash and shares ISAs to be merged into single New ISA (“NISA”) with annual tax-free savings limit of £15,000 from 1 July.
- Tax restrictions on pensioners’ access to their pension pots to be removed, ending the requirement to buy an annuity. In addition, there will be an increase in the total pension savings people can take as a single lump sum to £30,000.
- Business will be encouraged to invest in plant and machinery through an increased in the Annual Investment Allowance (AIA) from £250,000 to £500,000 these changes will have effect:
- from 1 April 2014 to 31 December 2015 for corporation tax; and
- from 6 April 2014 to 31 December 2015 for income tax.
- The existing SEIS tax breaks have been extended indefinitely, which should be good news for both investors and start-ups.
- The tax free personal allowance, the point at which people start paying income tax will be raised to £10,500 from 6 April 2015 and the threshold for the 40% income tax rate is to rise from £41,450 to £41,865 next month and by a further 1% to £42,285 next year from 6 April 2015. These changes will benefit all taxpayers.
News which didn’t feature in the Chancellors speech but which are of particular interest to certain taxpayers is that there have been no u-turns in respect of draft legislation and consultation documents aimed at the taxation of mixed partnerships and members of LLPs, or the accelerated payment in tax avoidance cases. These rules will apply from 6 April 2014 and draft legislation will be published on 27 March 2014 as appropriate.
If you or your business are affected by announcements in the Budget or new legislation coming into force from 6 April 2014 please do not hesitate to contact us.