2014 Budget round up

2014 Budget round up

March 19, 2014 by Fiona Prior

The Chancellor, George Osborne, delivered his Budget Statement today. The recent decidedly spring-like weather reflects the brightening economic picture — the Office for National Statistics recently announced that UK GDP grew by 0.7% in the final quarter of 2013 and 1.8% in 2013. But should we worry that forecasts predict another cold snap?

Certainly, the optimistic outlook isn’t shared by all. The Bank of England remains cautious about the recovery, voting unanimously to hold the base rate at 0.5%. Minutes from their meeting state, "There were initial signs that the anticipated broadening from household to business spending might have already begun. Even so, there remained some way to go to ensure that the recovery was both balanced and sustainable."

With this mixed picture, The Chancellor undoubtedly had a challenge on his hands to convince businesses and the public alike that the corner has been turned. So what were his main headline announcements?

Company taxation:

  • Corporation tax: Confirmation that corporation main and small business rates will be aligned at 20% from April 2015
  • Tax transfers: There will be a block on transfers of profits between companies to prevent tax avoidance
  • Stamp Duty Land Tax: The existing 15% SDLT on residential properties purchased by corporate entities will be extended at midnight tonight to properties over £500,000 (previously £2 million)
  • Company car tax: 2% increase in company car tax in 2017/18 and 2018/19 and a reduction in tax on low-emission cars
  • Social enterprises: New 30% tax relief for social enterprises
  • Annual Investment Allowance: Doubling of the 100% AIA from £250,000 to £500,000 from the end of next month. Scheme also extended until 2015
  • North Sea Oil: Introduction of a new allowance for Ultra High Pressure, High Temperature clusters
  • Enterprise zones: Current business rate discounts and enhanced capital allowances in enterprise zones extended for a further three years. New enterprise zone announced for Northern Ireland
  • R&D tax credits: Tax credits for small, loss-making businesses increased from 11% to 14.5%
  • Energy: Extension of the scheme to support energy-intensive industries until 2019-20
  • Seed Enterprise Investment Scheme: This scheme has been made permanent
  • VAT: Relief for ambulances and life boats on the costs of VAT on fuel

Help for businesses:

  • Export: Doubling of the export finance available to businesses to £3 billion. The costs of borrowing to be cut by a third
  • Apprenticeships: Extension of the grants available to businesses to increase the number of apprenticeships by another 100,000. Development of graduate level apprenticeships

Infrastructure:

  • Investment: There will be £270 million for the Mersey Gateway Bridge; an additional £140 million to repair damaged flood defences; £200 million for road repairs
  • Construction: Extension of the Help to Buy equity loan scheme to support the building of an additional 120,000 new homes by 2020

Duties:

  • Fuel duty: The planned September rise in duty has been scrapped
  • Air Passenger Duty: All long-haul flights will be subject to the same rate of APD from April 2015
  • Tobacco duty: 2% rise above inflation
  • Alcohol duty: Escalator scrapped. Freeze on duty on whiskey, cider and spirits. Duty on beer cut by 1p

Personal taxation:

  • Income tax: Personal allowance to be increased to £10,500 in April 2015. 1% increase in higher rate threshold in 2015 to £42,285
  • National Insurance: Class 2 NICs to be merged with self assessment from April 2016
  • Personal pensions reforms from 27 March 2014: The amount of guaranteed income a pensioner will need in order to access their savings flexibly will be reduced; the total amount that can be taken as a lump sum and the maximum size of small pension pot that can be taken as a lump sum will be increased and the capped drawdown withdrawal limit will increase to 150% of an equivalent annuity
  • Personal pensions reforms in 2015: All tax restrictions on how pensioners access their pensions and the requirement to buy an annuity will be removed. There will be no limits on how much can be drawn down. 25% of pension pots can be taken tax free. Remaining balances will be subject to normal, marginal rates instead of the current 55%. Free, impartial advice for all pensioners on getting the most out of their personal pension
  • Personal savings: Introduction of a new, combined ISA from July this year. Increased tax-free ISA savings limit to £15,000. Increased savings limit for Junior ISAs to £4,000. Increased premium bond allowances from £30,000 to £40,000 this June and a further increase to £50,000 in 2015
  • Tax relief for savers: 10p rate of tax for savers abolished
  • Inheritance tax: IHT will be waived for any emergency service worker who dies in the course of duty

Families:

  • Tax-free child care: Working parents with children under 12 will benefit from 20% support on childcare costs (up to £2,000 per child per year) from Autumn 2015. The scheme will also support the self-employed and any worker earning over £50 per week

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