The 2014 Budget – beneath the surface

The 2014 Budget - Beneath the surface

 

The small print revealed plenty of changes, not all of which made the Chancellor’s Budget speech.

 

1

Income tax

The Chancellor set out changes for next tax year, i.e. 2015/16:

  • The personal allowance is set to rise from the 2014/15 level of £10,000 to £10,500.
  • The higher rate threshold – the point at which you start paying higher rate tax – will rise by 1% to £42,285. This will still be almost £1,600 below its 2009/10 level.
  • The transferable tax allowance will begin for married couples and civil partners. To be eligible, neither you nor your partner may be higher or additional rate taxpayers. You can transfer £1,050 of your personal allowance to your partner (or vice versa).
  • The starting rate band for savings income will be increased from £2,880 to £5,000 and the rate of tax will be cut from 10% to 0%. This change is not as valuable as it sounds, because of the way the savings rate band operates.
2

Capital Taxes

There were a few small changes to capital taxes:

  • The capital gains tax annual exempt amount will increase by £100 to £11,100 for 2015/16.
  • The final period residential property exemption, which applies when a home is sold, has been reduced from 36 months to 18 months, with effect from 6 April 2014. The longer period will still apply for people moving into care.
  • Stamp duty land tax (SDLT) saw no rate changes to the main bands, despite the increase in property values. However, the Chancellor did decide to reduce the starting threshold from £2m to £500,000 for the 15% rate on residential properties owned by companies and similar bodies.
  • Inheritance tax was untouched, apart from some minor technical changes, including some related to trusts. Further changes to the treatment of trusts will follow consultation later this year.
3

Other taxes and measures

There was an important change on the business tax front, with the annual investment allowance (AIA) being increased from £250,000 to £500,000 from April 2014 until the end of 2015.

If you use a tax avoidance scheme that is disclosed to and disputed by HM Revenue & Customs (HMRC), or you enter into a scheme counteracted by the General Anti Abuse Rule introduced last year, you will have to make an upfront payment of the tax you hope to avoid.

To learn more about how these changes could affect you, please contact us at 020 7614 1000 or by email at info@helmgodfrey.com.

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The information in this article does not constitute advice and should be used for informational purposes only. The value of tax reliefs depends on your individual circumstances. Tax laws can change.The Financial Conduct Authority does not regulate tax and trusts advice and some forms of inheritance tax planning. This content has been provided to Helm Godfrey by Taxbriefs.