Budget 2014 - what's new and what's not.
There were no significant new business tax measures, the reduction of the UK corporation tax rate to 20% from April 2015 had been announced last year and will ensure we have the lowest rate in the G7. The biggest boost is the doubling to £500,000 and extension of the effective 100% tax relief on plant and machinery expenditure, the Annual Investment Allowance, to 31 December 2015 and an increase in R&D repayable credit rates encouraging businesses to invest in the future.
On the personal tax front, the personal allowance will now increase to £10,500 from April 2015. The higher rate threshold has been increased, for the first time in this parliament to £41,865 from April 2014 with a further 1% increase announced to £42,285 from April 2015. The headline being that everyone earning less than £100,000 per annum will pay less tax to differing degrees.
There was once again a focus on tax avoidance, with increased funds for HMRC and an increase in stamp duty rates for those still intent on buying UK residential property through a corporate structure. The penalising charges will in future impact on homes costing more than £500,000, as opposed to the previous £2m limit. There will still sadly be a form filing cost for genuinely exempt entities.
The over-riding message seemed to be the benefits of saving ‘from the cradle to the grave’ from increases in Child Trust Fund and ISA limits, a reform and simplification of ISA investing and two new fixed rate savings bonds for the over 65’s. The ability to draw on pension pots early is a clever one; it will generate more people paying, albeit lower, income tax on earlier drawdown and additional taxes when the monies are spent.
And finally, we can all welcome the return of the ‘three penny bit’ something to tell the kids about. One wonders however the costs of converting slot machines and paypoints all over the country. Will we see tax relief on these costs announced next year?