The Budget - are you a winner?
Spring 2014 Budget
Business, pensioners, drivers and drinkers come out on top in Osborne’s Spring 2014 budget
Chancellor George Osborne gives UK business a boost but comes down hard on tax avoidance schemes
Comment by Parrott and Coales solicitor and chartered tax advisor Humphrey Marten
Pensioners, businesses, drivers and those who like a tipple will be pleased by this year’s Spring Budget, but anyone hoping to escape the long arm of the taxman will be disappointed.
Good news for pensioners
For pensioners and those approaching retirement, the Chancellor’s announcement that there is to be a relaxation of the rules on how a pension pot can be converted into income, will be good news.
From April 2015, people will be able to draw down their pension pot at retirement, with complete freedom as to how they invest it, rather than being forced to buy an annuity.
The Chancellor also announced the introduction of a new pensioners’ bond savings scheme from January 2015 for all people over 65, which will pay interest rates of 2.8% for one-year bonds and 4% for three-year bonds.
Alcohol and petrol duty stays the same
The personal allowance for income tax is to be raised to £10,500 and there is good news for drivers; fuel duty will be capped.
Many people will also rejoice that duty on alcohol will be held at current rates.
Help for buyers and builders of first homes
The construction industry and house buyers will also get welcome shot in the arm with the extension of the Help to Buy scheme, intended to give first-time buyers a leg-up onto the home-ownership ladder.
How businesses benefit
The Budget also contained several measures aimed at stimulating business in Britain, including:-
- A doubling of the annual investment allowance to £500,000 per year
- A £7bn package designed to cut energy bills for British manufacturers
- Funding to support 100,000 more apprenticeships for small businesses
- A three-year extension for business rate discounts
- Enhanced capital allowances in enterprise zones
And good news for all savers: ISAs are to be simplified, allowing stocks, shares and cash ISAs to be merged into one pot, with an increased annual savings limit of £15,000.
Bad news for anyone ‘allergic’ to paying tax
However, the Chancellor had bad news for those hoping to take advantage of legal loopholes to avoid paying tax.
HM Revenue and Customs now have increased powers to collect outstanding tax and will levy significantly higher stamp duty on residential properties purchased through a company, known as a ‘company envelope’.
With effect from midnight on Budget Day, all ‘corporate envelope’ properties worth £500,000 and above will be subject to 15% stamp duty, a big leap from the previous purchase price threshold of £2million for properties bought in this way.
Reasons to be cheerful
Generally, the economic outlook is optimistic, with the Chancellor announcing a growth target of 2.7% for 2014 and 2.3% for next year, higher than the figures previously forecasted by the Office for Budget Responsibility.
Twelve months ago, the Office for Budget Responsibility downgraded growth prediction for 2013 to just 0.6%.
For expert, up to date advice on all your tax affairs,
Please contact Humphrey Marten at:
Web site content note:
This is not legal advice; it is intended to provide information of general interest about current legal issues.