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Ten Summarised Points from 2014 Budget

10_TaxAgility Accountants LondonYesterday, Wednesday 19 March 2014, Chancellor George Osborne delivered his fourth full budget to the House of Commons since the Conservatives came into power in 2010; a budget that has been seen as pivotal given that it will be Mr Osborne’s last before next year’s General Election.

Below we’ve summarised ten key talking points from Budget 2014, placing focus on areas that affect your personal finances, savings, and investments.

1) ISA’s Now Interchangeable

Potentially the biggest announcement of Budget 2014 was the chancellor’s plan for cash and share ISA’s to become interchangeable.

Stating that over twenty-four million people across the UK hold an ISA, Mr Osborne suggested that by creating a single New ISA, ISA’s will be simplified and more flexible, with savers being able to transfer their current ISAs from stocks and shares into cash, and visa versa.

2) Tax-Free ISA Limits Increased to £15,000

In line with the government’s plans for cash and share ISA’s to become interchangeable, Mr Osborne has also increased the tax-free ISA limits to £15,000 a year from 1 July 2014. Junior ISA limits have been raised to £4,000.

3) Income Tax Threshold Increased to £10,500

The personal income tax allowance will be increased from £10,000 starting April 2014, to £10,500 starting April 2015.

The chancellor was proud in pointing out that the personal allowance was just £6,500 when the Conservatives came into office four years ago, stating that since coming to power over three million individuals have been lifted out of income tax altogether.

4) Higher Rate Tax Threshold Increase

Mr Osborne also increased the higher rate income tax threshold for the first time in four years, with the threshold set to rise from £41,450 to £41,865 next month, followed by a further 1% to £42,285 in April 2015.

5) Transferrable Married Couples Allowance Increase

Alongside the income tax and higher rate threshold increases, the chancellor has chosen to link the rate of transferrable married couples allowance to the personal allowance, helping it see an increase to £1,050.

6) Tax on Envelope Properties from £500,000

From midnight last night (19 March), the chancellor stated in Budget 2014, “anyone purchasing residential property worth over half a million pounds through a corporate envelope will be required to pay 15% stamp duty.” The tax won’t apply to homes that are rented out.

7) Inheritance Tax Waived for Emergency Service Workers

Mr Osborne has waived inheritance tax for emergency service staff who lose their lives while working to protect the British public.

8) New Pensioner Bond

In January 2015 the government is set to launch a new Pensioner Bond, issued by National Savings and Investments, that will be accessible to everyone aged sixty-five and over.

The chancellor notes that the exact rates for the bond will be set in the autumn, “but our assumption is 2.8% for a one year bond and 4% on a three year bond.” £10 billion new pensioner bonds are set to be issued, with a maximum of £10,000 being able to be saved into each.

9) Changing Tax Treatment of Defined Contribution Pensions

The chancellor set out plans to “completely change the tax treatment of defined contribution pensions to bring it into line with the modern world.” This includes no longer making it a requirement to purchase an annuity, as well as removing restrictions on how much can be withdrawn from a pension, with all changes to come into effect from 27 March 2014.

10) Annual Investment Allowance Doubled to £500,000

The Annual Investment Allowance has been doubled by the chancellor from £250,000 to £500,000 until the end of 2015, with Mr Osborne noting that 99.8% of businesses are eligible for 100% of the current investment allowance.

 

Understanding the 2014 Budget

For more information or to read the full budget, this can be found here.

To speak with a professional to discuss how the Budget 2014 affects your personal finances, savings, and investments, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.

This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.

 

 

 

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