Below is a summary of the key points from the Chancellor’s 2014 Budget announcements.
Business Taxes:
- Corporation Tax – the main rate will reduce to 21% from April 2014, and to 20% in April 2015
- Corporation Tax – the small profits rate remains unchanged at 20%
- Capital allowances – the Annual Investment Allowance (AIA) for businesses investing in plant or machinery, will be doubled from £250,000 to £500,000 from April 2014. This will be until 31 December 2015, when it will return to £25,000.
- R&D Tax credits – The rate of the cash credit payable to loss-making SME’s who carry out R&D activities will increase from 11% to 14.5% from 1 April 2014
Personal Taxes:
- Income tax thresholds – the personal allowance will increase from £9,440 to £10,000 in tax year 2014-15 (commencing from 6th April 2014)
- Income tax thresholds – the basic tax rate limit will reduce from £32,010 to £31,865 in tax year 2014-15, and then again to £31,785 in tax year 2015-16.
- Income tax thresholds – the higher rate threshold will increase from £41,450 to £41,865 in tax year 2014-15, and to £42,285 in tax year 2015-16
ISA’s
- From 1 July 2014 all existent ISA’s will be become the New ISA (NISA)
- For tax year 2014-15, the subscription limit will increase to £15,000
- The full amount may be invested in a cash account – previously it was 50%
Savings
- From 6 April 2015, the savings Income tax rate will reduce from 10% to 0%, up to £50,000 of savings income
Pensions
- Changes to pension rules covering: the limit of the Trivial Commutation (increasing from £18,000 to £30,000), maximum amount that can be drawdown under a capped drawdown arrangement (increasing to 150%), the amount of guaranteed income needed in retirement to access flexible drawdown (reduce to £12,000 per annum), and the amount of pension pot that can be taken as a lump sum (increase to £10,000).
VAT
- The registration threshold will increase to £81,000 from 1st April 2014
