Budget 2014 - Key Tax Measures

Income Tax

  • The basic personal allowance increases from £9,440 in 2013/14 to £10,000 in 2014/15, and to £10,500 from 6 April 2015
  • Basic rate band for 2014/15 will reduce to £31,865 from £32,010 in 2013/14, and for 2015/16 will reduce to £31,785
  • The transferable tax allowance for married couples will increase to £1,050 from April 2015
  • From April 2015, the 10% savings tax rate will be reduced to 0% and increased to £5,000

VAT

  • VAT registration limit increases from £79,000 to £81,000 from 1 April 2014
  • VAT deregistration limit increases from £77,000 to £79,000 from 1 April 2014

Corporation Tax

  • The main rate of corporation tax will reduce to 20% from April 2015, bringing it in line with the small companies rate. The main rate will therefore drop from 23% in 2013/14 to 21% in 2014/15 and there will be a single rate of 20% from April 2015

Capital Gains Tax

  • The annual exemption will rise to £11,000 for 2014/15 and to £11,100 for 2015/16
  • The new agricultural subsidy Basic Payment Scheme entitlements will be included within the business asset rollover relief classes of qualifying assets
  • As announced in the Autumn Statement, the principal private residence relief final period exemption will reduce from 36 months to 18 months from April 2014

Inheritance Tax

  • The Nil rate band remains at £325,000 until April 2018

Capital Allowances

  • The Annual Investment Allowance (AIA) of £250,000 will be doubled to £500,000 from 1 April 2014 and will be extended to 31 December 2015

Pensions

  • The level at which pension savings can be accessed on a drawdown basis will be reduced from £20,000 to £12,000, meaning an individual must have at least £12,000 income per year before they are able to draw the balance of their pension fund as they wish, rather than £20,000 income previously
  • Where you are aged 60 or over and you have overall pension savings of £18,000 or less, this could be taken in one lump sum. This limit increases to £30,000 from 27 March 2014
  • The capped drawdown limit will increase from 120% to 150% from 27 March 2014
  • It is proposed that from April 2015, people will be able to take their pension pot in whichever format they choose, and will only pay their marginal rate of tax on anything they withdraw in excess of the tax free lump sum. Free impartial guidance will be offered to all those who have a defined contribution pension scheme and have reached retirement age. The government has published a consultation regarding these changes alongside the Budget
  • The amount for small individual pension pots that can be taken as a lump sum will be increased from £2,000 to £10,000 from 27 March 2014 and the number of these pots that can be taken as a lump sum will increase from 2 to 3
  • For people aged 65 or over, there will be two fixed rate pensioners bonds introduced in January 2015. A 1 year bond with an intended rate of interest of 2.8% gross, and a 3 year bond paying 4% gross. Details will be confirmed in the Autumn Statement later in the year. This will be subject to prevailing market conditions at the time

Other

  • From 1 July 2014, there will be a New ISA with a limit of £15,000 per year. There will be equal limits for cash and stocks and shares, meaning an individual can invest the full £15,000 in cash per year should they wish. Savers will be able to transfer funds invested in stocks & shares ISAs to cash should they wish
  • The limit for Junior ISAs and Child Trust Funds will be increased from £3,720 to £4,000
  • The cap on investments in Premium Bonds will be increased from £30,000 to £40,000, and again to £50,000 for 2014/15
  • The fuel duty increase planned for 1 September 2014 has been cancelled
  • The £2,000 Employment Allowance from April 2014 for businesses and charities of up to £2,000 towards their National Insurance contributions bill was confirmed
  • The new Tax Free Childcare Scheme to be introduced from Autumn 2015 to support working families with 20% of their childcare costs up to £1,200 per child per year was confirmed
  • The threshold for the small employment-related loans exemption limit increase from £5,000 to £10,000 has been confirmed and will take effect from April 2014

19 March 2014