Personal Tax Allowances
- For people born after 6 April 1948, the personal tax allowance for 2014/15 is £10,000. This will increase to £10,500 from 6 April 2015.
- For people born on 5 April 1948 or before, the personal tax allowance for 2014.15 is £10,660.
- From April 2015, spouses and civil partners will be able to transfer 10% of their personal allowance to each other, which means £1,050 in 2015/16.
- To be eligible to make or receive the transfer, neither party must be liable to tax at a higher or additional rate.
Income Tax rates and bands 2014/15
- The basic rate of 20% will be charged on income up to £31,865.
- The higher rate of 40% will be charged on income from £31,866 to £150,000.
- The additional rate of 45% will be charged on income over £150,000.
- The main rate will be 21% from April 2014, falling to 20% from April 2015.
- Air Passenger – From 1 April 2015, the number of destination bands are going to be reduced from four to two, resulting in long haul flights being charged duty at a lower rate. For example a family of four visiting relatives in the Caribbean or India, flying in economy class, will pay £56 less in duty.
- Beer – The price of a pint will be cut by 1p from 24 March 2014.
- Cider/Spirits – The duty has been frozen for 201415.
- Wine/Sparkling Cider – The duty rates for wine and sparkling cider exceeding 5.5% in strength will be increased by the rate of inflation, based on the Retail Price Index. This means an increase of 8p to the price of high strength sparkling ciders and 6p to the price of a bottle of wine.
- Tobacco – Duty will rise at 2% above inflation, based on the Retail Price Index, adding 24p to the price of 20 cigarettes.
- Growth of 2.7% is expected in 2014, 2.3% in 2015, 2.6% in 2017 and 2.5% in 2018.
Budget News Headlines
- From 1 July 2014, cash and share ISAs are to be merged into a New ISA – NISA – with an annual tax-free savings limited of £15,000. Saves will now have completed flexibility over the cash and shares mix within the overall limited of £15,000.
- From April 2015, the starting rate of tax savings income will be reduced from 10% to nil. The maximum amount of taxable savings income that will be eligible will rise to £5,000 from £2,880.
- From 1 June 2014, the cap on Premium Bonds will rise from £30,000 to £40,000, increasing further to £50,000 in 2015/16. From August 2014, two £1 million prizes will be on offer, instead of the current one.
- HMRC is going to be given debt collection powers to recover money direct from the bank and building society accounts, including ISAs, of debtors who owe over £1,000 of tax or tax credit debts. HMRC will use this route after the debtor has been contacted ‘multiple times’. A minimum of £5,000 will be left ‘across’ debtors’ accounts after the debt has been recovered.
- To continue to support business investment, the Government is doubling the Annual Investment Allowance to £500,000 from April 2014 until the end of 2015.
New £1 coin
A new 12 sided £1 coin is going to be introduced to protect against counterfeiting. The Royal Mint estimates that about 3% of all £1 coins in circulation are now forgeries. A public competition is going to take place to decide the design on the reverse or ‘tails’ side of the new coin.
HMRC is going to seek an upfront payment of tax from people who have invested in disputed tax avoidance schemes.
HMRC Investigation Target
HMRC’s compliance yield target – the money it collects from pursuing tax evasion and tax avoidance – has been increased to £24.5 billion in 2014/15 and £26.3 billion in 2015/16.
VAT Registration and Deregistration Limits
With effect from 1 April 2014, the new thresholds will be as follows:
UK taxable supplies – Registration £81,000, Deregistration £79,000.
‘Relevant Acquisitions’ from other EC Member States – Registration £81,000, Deregistration £81,000.