The budget speech delivered by George Osborne has been described as "one for savers and pensioners" as well as having half an eye on next year's general election. As a courtesy, here are the major details -

 

For the main taxes on the following will be of interest:

Corporation Tax

Corporation tax rates have not changed for companies with profits up to £300,000 and remains at 20%.

The main rate of corporation tax continues to reduce and it is planned will be at 20% in 2015. There is therefore no change from last year and forward planning already in place need not be altered.

Capital Allowances

The temporary increase in the maximum expenditure which can qualify for Annual Investment allowance on the purchase of capital equipment is to be extended to 31st December 2015 and increased to £500,000 with effect from 1st April 2014. There will no doubt be another set of complicated transitional rules to determine the maximum allowable for companies who have an accounting year end which spans this date.

Personal taxes

Allowances and tax bands

Personal allowances will be increased to £10,500 with effect from 6th April 2015. The threshold at which higher rate tax starts will set at £42,285 from that date which is a small increase from the rate for 2014/15 which is £41,865. Class 1 and Class 4 NI limits remain aligned to these limits.

There are also proposal to limit the extent to which non-UK tax residents, other than those with strong links to the UK, will be able to benefit from the personal allowance in respect of UK income

Tax rates

There is no change in the basic, higher and additional rates of tax which will remain at 20%, 40% and 45% respectively.

Naturally the changes in the allowances and rates for 2014/15 will mean that a taxpayer who runs their own business and is paid a salary equal to the personal allowance with additional money paid by way of a dividend up to the threshold at which higher rates of tax is paid will find themselves £428 per annum better off in 2015/16 compared with 2014/15.

VAT

VAT registration and deregistration limits are increased to £81,000 and £79,000 respectively from 1st April 2014.

Cars

Following the imposition of benefit in kind charges for low emitting cars (those just over 75gm/km) last year the rates in all the bands for company cars will increase by 2%. Previously there had been an upper limit of 35% for high emitting cars. This too will increase by 2% to 37%.

The fuel benefit charges and the VAT fuel scale charges will also increase in line with the RPI. So too will the van and van fuel benefits.

The fuel duty increase planned for September 2014 is being cancelled (as was the case last year).

Capital gains tax

Capital Gains tax only applies to individuals who are resident in the UK for tax purposes. Proposal will be introduced to extend the scope of capital gains tax in respect of the sale of UK residential property to non-UK residents.

Increase in the 2014/15 annual capital gains allowance to £11,000.

Pensions

There were some significant announcements on pensions.

Restrictions which require a pensioner to acquire an annuity when they take their pension pots are to be ended. Furthermore any taxable part of a pot taken on retirement which had previously been charged at 55% will instead be taxed at normal income tax rates making it easier to draw money from pension pots.

The trivial commutation limit for taking the whole of a small pension pot as a lump sum is to be increased to £30,000.

Savings

A new pensioner bond of up to £10,000 is to be introduced for the over 65’s which will provide “market leading rates”

Cash and shares ISA’s can now be merged with an annual limit of £15,000

The little known and underused 10% tax band on savings (which only applies to savings income which when added to other income takes the taxpayer above the person allowance limit but by no more than £2,790, is to be extended to £5,000 and the rate reduced to 0% thus generating a further refund. It should be remembered that anyone who is a non-taxpayer can ask for any savings income to be paid without tax deduction

Environmental taxes

These taxes will be increased in line with inflation with effect from April 2015

A word of warning

As we commented last year, with all matters referred to in the budget speech the “devil will be in the detail” and the full impact and understanding of all the announcements will not be made clear until the full parliamentary process has been undertaken and the proposals become law in the finance act later this year. We will issue further notices should any matters of significance be announced.

Tobacco and alcohol

Duty rises were imposed on tobacco and alcohol again with the exception of beer spirits and cider. A cut of 1p per pint in beer duty was announced and duty on spirits and cider are frozen.

In the meantime you may care to visit our website for a more general review of the budget proposals.

Last modified on Thursday, 04 September 2014