This years Budget is focused on boosting economic security and aspiration.
The strengthening economic recovery, with unemployment and inflation falling and increasing growth this year is amongst the strongest of any Western economy. However, a Treasury source said that despite the economic recovery, the UK was still borrowing too much and difficult decisions would have to be made.
The eye is in the detail and ICS will be reading the entire Budget 2014 document when it comes through shortly after the speech but below is a run down of everything that was said earlier today.
Tax free threshold increased to £10,500.
20% basic rate of income tax will fall again – from £32,010 of taxable income to £31,865.
The overall threshold for paying the 40% higher tax rate – the combined effect of the annual allowance and the basic rate band – actually increases by 1% this April, from £41,450 of income (£9,440 plus £32,010) to £41,865 (£10,000 plus £31,865).
One person in a married couple or a civil partnership will be able to transfer up to £1,000 of their personal tax allowance to their partner. This will not be available to couples where the recipient is a higher or additional-rate taxpayer.
The primary threshold for employees will rise from £7,755 to £7,956 while the upper earnings limit goes up from £41,450 to £41,865.
A new NIC employment allowance of £2,000 begins in April which will the first £2,000 from the NI bill for every business and charity.
Annual allowances for paying into an Isa (Individual Savings Account) will rise and savers can invest up to £15,000 in cash accounts, stock and shares or a mix of the two. They will also be able to transfer money from stockmarket investments to cash savings and vice versa. Coming into force on 1st July, 2014 and referenced as the New Isa or Nisa.
The limits for Junior Isas has also been raised from £3,720 to £4,000.
Those retiring will no longer a need to buy an annuity and the lump sump that can be withdrawn has been increased from £18,000 to £30,000.
For anyone aged 65 and above, a Pensioner Bond will be created from January 2015 in which pensioners will be able to put £10,000 a year into it. It will be ran by the government, backed by National Savings and Investments.
The total amount you can contribute to your pension scheme with tax relief each year is being cut from £50,000 to £40,000.
Tax-free lifetime allowance for the value of a pension pot is being cut from £1.5m to £1.25m.
The new tax-free childcare vouchers policy has been brought forward and will begin in September 2015 and apply to all children under 12. Expected to help 1.9 million families with childcare costs by providing up to £2,000 per child each year, couples where neither parent earns more than £150,000 will qualify. Working families earning at least £50 a week will qualify, allowing part-timers and the self-employed to benefit.
The new system is to replace employer-based childcare vouchers and will help twice as many people. Parents will set up online “tax-free childcare accounts” run by HMRC and NSI.
There will be a formal consultation on the government’s plan to impose capital gains tax (CGT) on non-UK residents who own and sell a home in the UK. The tax is scheduled to start in April 2015 possibly affecting hundreds of thousands of UK citizens who have moved abroad but still own a home in the UK.
The ability of a property owner to still avoid paying CGT when selling their main home, even if they stopped living in it up to three years ago, will be restricted and the exemption period from CGT will be cut in half from three years, to just 18 months.
Important changes to the payment of VAT on internet purchases and downloads. Buyers will now have to pay the VAT rate of their home country, not that of a retailer.
For example, Amazon charges just 3% VAT, the rate in its home territory – Luxembourg but from 1 January 2015 they will have to charge UK purchasers the 20% British VAT rate, handing that money over to the UK government.
This will result in higher charges for some UK internet shoppers who use a foreign service, but is expected to raise around £300m more annually for the Treasury.
The Budget sets out to increase manufacturing output and improve the balance of payments by boosting exports with schemes, incentives and tax breaks for some businesses.
Business rates will be cut next month, and a relief for small companies has been extended to April 2015.
Employers will be exempt for NI contributions for younger employees.
There will also be a requirement for banks to refer businesses whose loan applications they reject to alternative lenders.
Extra money for flood defences – £140 million and £200 million for filling potholes
Fuel duties are going to remain frozen until September 2015.
1p off a pint of beer
Cider duty and Scottish whisky duty frozen.
Stay updated with ICS as we’ll be giving you a full rundown of the finer points in Budget 2014 next week.