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March 19, 2014

A Brief Look at the Budget 2014

Key Points from the Budget 2014:


- From April 2015 all tax restrictions on the amount that pensioners may withdraw from their pension pots will be removed, thus removing the need to buy an annuity.

- Taxable element of pension pot to be taxed at marginal rate of tax (rather than the current 55% tax rate) from April 2015.

- Amount that may be withdrawn from pension as a lump sum to be increased to £30,000 from 27 April 2014.

- Increase in age that people can access their pension pots from 55 to 57 in 2028

Personal Tax & IHT

- Increase in personal allowance from £10,000 in 2014/15 to £10,500 in 2015/16 for those born after 5 April 1948

- Higher rate threshold set at £41,865 for 2014/15 and £42,285 for 2015/16

- The current system of cash and stocks and shares ISAs is to be reformed from 1 July 2014 with the introduction of New ISAs (NISAs) with a tax free savings limit of £15,000 per year and no restriction on the amount that may be invested in cash.

- Starting rate of tax for savings income to be reduced from 10% to 0% from 2015/16.  The 0% rate will apply to up to £5,000 of savings income and will therefore be of use to those on low incomes with taxable savings (such as pensioners)

- Further detail released in relation to the transferable nil rate band for married couples

- IHT loophole is closed, which allowed a deduction for debts to be claimed where the borrowed funds were deposited in a foreign currency account which was not be subject to IHT through the excluded property rules.

- CGT relief for up to 50% of capital gains reinvested in Seed Enterprise Investment Scheme (SEIS) shares is to be permanently extended from 2014/15 onwards (previously the relief applied to 100% of gains reinvested in 2012/13 and 50% of gains reinvested in 2013/14).

Business Taxes & Property

- Temporary increase in the Annual Investment Allowance (AIA) for capital allowances from to £500,000  until 31 December 2015 .  The AIA should revert to £25,000 at the end of this period.  Care will need to be taken where accounting periods straddle changes in the AIA.

- R&D Tax Relief - the rate of the payable tax credit for loss making companies is to increase to 14.5% from 1 April 2014.

- Tax measures  (such as the 15% rate of SDLT, ATED and CGT at 28%) currently payable where certain corporate entities (known as non natural persons) own residential property worth more than £2m, are to be extended to residential properties worth more than £500,000.

See our Spring 2014 Tax Update for more recent news and case law.

Contact us today to discuss your tax requirements.
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