George Osborne has just delivered the spring budget as I sit down to write this and I can’t help thinking it is done with one eye on the economy and the other firmly fixed on the general election, which in politics is exactly what politicians do. We elect them to spend our hard earned money and if the latest advert from the Conservatives is to be believed; “Cutting the bingo tax and beer duty to help hardworking people do more of the things they enjoy” then I know what I shall be doing this weekend!
In fact, I’m off to Spain on a veteran’s cricket tour for the weekend, well if you call one match against the 40 Club of Spain a tour, so I expect that the impact of the budget will have to wait until I get back.
One thing that all the pundits seem to be agreed on is that it is a budget to woo savers and the silver-haired along with those who run small businesses. I have pulled out some points from the speech below.
The tax-free annual personal allowance will increase to £10,500 from April 2015. The higher rate threshold will rise to £41,865 from April 2014. It will rise by a further 1% to £42,285 in 2015. The transferable tax allowance for married couples and civil partners will rise to £1,050.
This increase had been well publicised and so was not a surprise, however, the changes to pensions certainly did come as a surprise, at least to me!
Tax on pension amounts taken as a lump sum, over and above the 25% tax-free entitlement, will be charged at normal marginal income tax rates rather than at 55% from April 2015. Compulsory annuities will be scrapped and there will be more flexibility when drawing an income from a pension. While this may not sound much believe me it caused quite a stir in our office. If you want to understand how this might impact you call our friendly pension people on the number below.
Stocks and shares and cash ISAs will be merged to create one New ISA with a tax-free limit of £15,000 from 1 July 2014. The Junior ISA allowance will increase to £4,000 a year.
And finally good old Ernie will double the amount of millionaires it creates and during next year the investment cap will be raised to £50,000 per person.
For small businesses:
I pick out two measures that may be of interest; the apprenticeship grant for small employers has been extended and the research and development tax credit for small loss making firms increases from 11% to 14.5%. Again this last one may not seem much but it is amazing how many small businesses do not claim their entitlement.
As ever if you would like any more information on the points made above, please call me on the number below.
Lyndhurst Financial Management Limited
Authorised and Regulated by the Financial Conduct Authority