The Chancellor has just sat down from delivering the 2014 Budget speech. The major surprise of the Budget was the raft of changes to defined contribution pension schemes, in particular the relaxation in accessing funds on retirement. More details will be provided on these changes as they emerge.The main tax and savings matters referred to in the speech were as follows:
Business Tax
- R & D tax credits on loss making small businesses will be increased from 11% to 14.5% from next month.
- The seed enterprise investment scheme is to be made permanent.
- A new tax relief will be introduced for investment in social enterprises.
- Film tax reliefs are to be extended to theatres.
- The annual investment allowance for capital expenditure is to double to £500k from next month, and will be extended to the end of 2015.
- Enhanced capital allowances and business rate reliefs will be extended for enterprise zones.
Savings and income tax
- The personal allowance will increase to £10,500 from April 2015.
- The higher rate tax band will increase to £41,865 next month and £42,285 for the following year.
- Cash and stock ISAs will merge to a single ISA with an extended limit of £15,000.
- The junior ISA limit will increase to £4,000.
- A new pensioners bond will be introduced for savers.
- The cap on investment in premium bonds will increase to £40,000 from June and to £50,000 next year.
- The 10% starting rate on savings income will be reduced to zero.
Tax Avoidance
- Proposals are to be implemented requiring the users of registered tax avoidance schemes to pay any tax due up front.
- There will be an increase in the number of compliance checks.
- Measures to prevent the abuse of EIS are to be implemented.
- The annual tax charge on enveloped dwellings will be extended to residential homes worth over £500k from midnight tonight.
Pensions
- Drawdown restrictions for defined contribution pension schemes will be significantly relaxed and changes will be phased in over a period of time from next week.
- A free impartial advice service is to be made available to pensioners under a new ‘Right to Advice’ scheme.
Duties
- The alcohol duty escalator is to be scrapped and instead duty will be linked to inflation.
- Whisky, cider and other spirit duties are to be frozen.
- Beer duty is to be reduced by 1p per pint from next week.
- Bingo duties will be halved to 10%.
This is very much an overview of the speech and more details will be available in the press releases on which we will report in due course. If you do require any further information at this stage please contact our tax partner Jenny Marks
