How does the 2014 Budget affect you?

What does it all mean?

The main tax headlines from George Osborne’s fifth Budget are:

  • The Chancellor has definitely targeted the pensioner vote (in the run up to next year’s general election), with significant changes announced to ISAs and pensions, which will allow greater flexibility and access, plus a new pensioner bond which will pay interest of up to 4% per annum
  • Income tax personal allowance to be increased (from £9,440) to £10,000 on 6 April 2014 (and to £10,500 on 6 April 2015)
  • Higher rate tax threshold to be increased from £41,450 to £41,865 on 6 April 2014
  • Main rate of corporation tax to be reduced from 23% to 21% on 1 April 2014 and 20% on 1 April 2015
  • Annual Investment Allowance (essentially 100% capital allowances) doubled to £500,000 and extended for a further year to 31 December 2015
  • Help to buy equity loan scheme extended to 2020
  • R&D tax rules for SMEs to be made more favourable whereby losses can be converted to cash payments at a rate of 14.5% (increased from the current rate of 11%)
  • Seed Enterprise Investment Scheme to be made permanent
  • Introduction of a wide range of further tax anti-avoidance rules which will require disputed tax to be paid up-front
  • From Autumn 2015, 20% tax relief on childcare costs (up to a maximum of £10,000 of childcare costs per child per year)
  • Bingo duty halved to 10%
  • Fuel duty increases scheduled for September 2014 cancelled
  • Tobacco duty to increase by 2% above inflation, duty on cider frozen, but beer duty again REDUCED by 1 pence (another “penny off a pint’!)

Overview – Targeting the pensioner vote…..

The lead up to next year’s general election was clearly set underway today with George Osborne announcing a number of significant changes to pensions, ISAs and premium/pensioner bonds (together with the halving of bingo duty!).

Pensioners have certainly had a difficult time since 2008, with interest rates at historic lows for most of this period, so it is very welcome to see the Chancellor introduce a number of measures that will provide financial help to this sector of the population.  Some of the measures are quite radical, such as the ability to fully access a pension fund.

The Chancellor also had something to offer business, with a doubling of the Annual Investment Allowance to £500,000 and an extension of this relief to 31 December 2015 (he had obviously realised that its scheduled expiry on 31 December 2014 was bad timing with a general election taking place in May 2015!).

However, it was not all good news as there was “devil in the detail” with retrospective tax rules being introduced whereby anyone who has entered into a DOTAS (Disclosure of Tax Avoidance Scheme) arrangement will now have to pay the tax up-front to HMRC, whilst the courts determine whether the tax is actually payable or not.  The government has indicated that “accelerated tax payment notices” will be issued to 33,000 individuals and 10,000 companies resulting in £7.3 billion of tax being sought by HMRC!  It is extremely rare for tax legislation to be introduced on a retrospective basis and it will be very interesting to see if this radical measure will ultimately find its way on to the statute books this Summer.

Please click here to download a copy of our 2014/15 Tax Tables.

Please click here if you would prefer to read and download our Budget 2014 highlights as a pdf.

Click on the headings below to read further information on the affects of today’s announcements:

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