George Osborne was full of the joys of spring as he delivered his Budget with statements such as there being “no major advanced economy in the world growing faster than the UK” and promises to “fix the roof when the sun is shining”.
Major announcements were made in relation to the taxation of pensions. The 25% tax free amount which can be taken on retirement will remain and, in an attempt to ease the pressure on pensioners to take an annuity, the current drawdown limits are to be relaxed with some changes from next week and a major overhaul of the legislation promised for next year. This will remove the 55% tax charge that currently applies if too much is drawn from a pension and will mean complete freedom in the amount that can be drawn, with the only tax charge being income tax at the individuals marginal rate.
Encouraging for savers, is the increase in the ISA limit to £15,000 per annum for both cash and share ISAs and £4,000 for junior ISAs and the ability to transfer ISAs from one fund to another or from shares to cash and vice versa. Also, for pensioners, was the promise of a new Pensioners’ Savings Bond from NSI, paying 4% per annum for those locking in for three years.
Good news for businesses included confirmation of the continued lowering of the main rate of Corporation Tax to 21% from this April and 20% next, a reminder of the £2,000 Employment Allowance and that there will be an NIC exemption for the under 21s. In addition the Chancellor pledged to provide support for businesses taking on Apprentices by extending grants available.
Perhaps the biggest news for small businesses was the doubling of the annual investment allowance to £500,000 and the extension of the period over which that can be claimed to 31 December 2015. According to Mr Osborne over 99.8% of businesses will now be able to claim 100% tax relief on capital expenditure which qualifies.
Various measures were announced to support businesses exporting with the hope that “made in Britain” will be seen worldwide once again and promises of further support were given to builders of new homes including the extension of the help to buy scheme to 2020.
For those businesses investing in R&D, the tax credit on losses is to be increased to 14.5% and good news for start-up companies as the SEIS scheme originally brought in temporarily is going to become permanent.
In continued support for tax policies designed to encourage us to be more environmentally friendly, there are to be further increases in the percentage applied to calculate benefit in kind charges on company cars. Above inflation rises on tobacco duty were announced to discourage unhealthy habits but there was some good news for alcohol drinkers with some forms of alcohol such as Scottish whisky and cider seeing duty remain static and a drop of 1p duty on a pint of beer.
Confirmation of the £10,000 personal allowance from this April was followed by a promise of a £10,500 personal allowance from next April. There was even a tax saving announced for 40% tax payers with the basic rate band being increased to £42,285 from April 2015. All those with incomes up to £100,000 per annum should benefit from this.
Good news for working parents as, from next year, there is to be a 20% tax relief on childcare costs up to £10,000.
Alongside all of this, there were promises of tough new global tax rules and legislation to force those who enter into tax avoidance schemes to pay tax up front.
For more information on how the changes may affect you, please contact us.