Tax Video Update - Budget 2014 reaction
21 March 2014 •
In his Budget Statement for 2014 the Chancellor announced a number of changes and confirmed the start of measures which had been outlined in both the Budget and the Autumn Statement of 2013.
Here is an overview of some of the key points that could affect you and your business.
Increased Pension Flexibility
From April 2015, individuals with defined contribution pensions will now be able to draw down from age 55 with tax charged at their marginal rate rather than at the current 55% tax rate. In addition, there will no longer be a requirement to purchase an annuity with the pension funds. Individuals with such pension pots are to be offered free and impartial face-to-face guidance at the point of retirement.
New Individual Savings Accounts (NISAs)
ISAs are to be reformed into a simpler product by merging the Cash ISAs and Stocks and Shares ISAs into a single NISA. The subscription limit will be increased to £15,000.
National Savings & Investments (NS&I) support for Savers
The limit for investing in Premium Bonds is to be increased to £40,000 from 1 August 2014 and then increasing to £50,000 in 2015/16.
NS&I are also to launch a Pensioner Bond for savers over 65 which will offer higher interest rates than currently available. The investment limit will be £10,000 per bond.
Seed Enterprise Investment Scheme (SEIS)
The Chancellor announced that he will make the SEIS permanent in its current format.
There is also to be a consultation over Summer 2014 regarding EIS and VCTs that are being used to allow investment in low risk activities. This may affect the current market availability of these types of EIS and VCT investment vehicles.
Capital Allowances Annual Investment Allowance (AIA)
The AIA is to increase to £500,000 for qualifying investment in plant and machinery made on or after 1 April 2014 until 31 December 2015. This is an increase from the current £250,000 rate and will encourage further investment by businesses.
Annual Tax on Enveloped Dwellings (ATED)
HMRC are extending the scope of this annual tax charge to properties worth over £500,000 from its current limit of £2,000,000. This will be phased in over the next two years but will represent a cost to be taken into account when deciding whether a company should be used to acquire UK property.
There is also an extension to the 15% rate of Stamp Duty Land Tax (SDLT) when property is purchased by certain non-natural persons. This is also being extended to properties worth £500,000 or more from 20 March 2014.
Class 2 National Insurance
From April 2016, Class 2 National Insurance for the self-employed will no longer be collected through direct debit or direct payment but will rather be collected through the self-assessment system and paid at the same time as self-assessment liabilities and Class 4 National Insurance Contributions.
Corporation Tax rates announced previously
The corporation tax rate continues to fall towards its 20% target and from April 2014 will be 21%, reaching 20% from April 2015.
Personal Allowance and Higher Rate Threshold
The personal allowance will rise from £9,440 in 2013/14 to £10,000 in 2014/15. The higher rate threshold will also be increased to £41,865.
HMRC intends to consult on whether the current personal allowance should be restricted only to UK residents and those living overseas who have strong economic ties to the UK.
Partnerships with mixed memberships
HMRC has confirmed that it will introduce legislation that will take effect from April 2014 to counter the disguising of employment relationships in LLPs and prevent the allocation of business profits to corporate members.
Beneficial Loans
As previously announced in Budget Statement 2013, the threshold for small loans exemption limit will be increased from £5,000 to £10,000 and this will come into force from 6 April 2014.
Dual Contracts
As announced in the Autumn Statement 2013, HMRC will introduce legislation to prevent high earning non-domiciled Individuals from avoiding tax by dividing up their employment artificially into two contracts, one for UK duties and one for overseas duties.
If you would like to talk to one of the tax team and explore what Budget 2014 could mean for you and your business then please call 020 7731 6163.
2014/15 Tax Card
For a complete overview you can also download the our latest Tax Card
No responsibility for loss occasioned to any person acting on or refraining from action as a result of the above material can be accepted by us.