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20/03/2014

Budget announced for “makers, doers and savers”

Small and medium sized businesses will do well out of the Chancellor’s Budget, with the announcement of measures to encourage investments and boost exports. Larger businesses will probably welcome the lack of change, although the impact of international tax changes from the OECD will start to take effect next year.

We have pulled together some salient points covered off by the Chancellor’s budget announcement;

Business

  • Direct lending from government to UK businesses to promote exports doubled to £3bn and interest rates on that lending cut by a third
  • Business rate discounts and enhanced capital allowances in enterprise zones extended for three years
  • The main rate of corporation tax will be reduced to 21% from April 2014 and further reduced to 20% from April 2015.
  • The Seed Enterprise Investment Scheme (SEIS) to be made permanent along with the associated capital gains tax relief for re-investing chargeable gains in SEIS shares.
  • There will be an increase in the rate of the Research & Development (R&D) tax credit for loss making small and medium sized enterprises (SMEs) from 1 April 2014.

George-Osborne

Taxation

  • Point at which people start paying income tax will be raised to £10,500
  • Bingo duty will be halved to 10%
  • Threshold for 40p income tax to rise from £41,450 to £41,865 next month and by a further 1% to £42,285 next year
  • Inheritance tax waived for members of emergency services who give their lives in job
  • Tax on homes owned through a company to be extended from residential properties worth more than £2m to those worth more than £500,000
  • All long-haul flights to carry lower rate of air duty currently charged on flights to US
  • VAT waived on fuel for air ambulances and inshore rescue boats
  • Duty on fixed-odds betting terminals increased to 25%

Savings

  • Cash and shares Isa’s to be merged into single New Isa with annual tax-free savings limit of £15,000 from 1 July
  • The 10p tax rate for savers abolished
  • Cap on Premium Bonds to be lifted from £30,000 to £40,000 in June and £50,000 next year

Pensions

  • All tax restrictions on pensioners’ access to their pension pots to be removed, ending the requirement to buy an annuity
  • Taxable part of pension pot taken as cash on retirement to be charged at normal income tax rate, down from 55%
  • Increase in total pension savings people can take as a lump sum to £30,000
  • New Pensioner Bond, paying “market-leading” rates, available from January to over-65s, with possible rates of 2.8% for one-year bond and 4% for three-year bond – up to £10,000 to be saved in each bond

Alcohol, tobacco and gambling

  • Beer duty cut by 1p a pint
  • Duty on spirits and ordinary cider frozen
  • Tobacco duty to rise by 2% above inflation and this escalator to be extended beyond the next general election

Energy and fuel

  • Fuel duty rise planned for September will not happen
  • £7bn package to cut energy bills, including £18 per ton cap on carbon price support, predicted to save medium-sized manufacturers £50,000 and families £15 a year

State of the economy

  • GDP forecast to grow by 2.7% this year and 2.3% next year, then by 2.6% in 2016 and 2017 and by 2.5% in 2018budget

Welfare

  • Budget to be capped at £119bn for 2015-16, rising in line with inflation to £127bn in 2018-19. The cap includes child benefit, incapacity benefit, winter fuel payment and income support – but does not include state pension and Jobseeker’s Allowance

Public borrowing/deficit

  • Deficit forecast to be 6.6% of GDP this year, 5.5% in 2014-15 then falling to 0.8% by 2017-18 with a surplus of 0.2% in 2018-19
  • Borrowing forecast to be £108bn this year and £95bn next year, leading to a surplus of almost £5bn in 2018-19
  • A new charter for budget responsibility to be brought in this autumn
  • Promises to make permanent £1bn reduction in government department overspends

Housing/infrastructure

  • Help to Buy equity scheme for new-build homes extended to 2020
  • Support for building of more than 200,000 new homes
  • £270m guarantee for Mersey Gateway bridge
  • A “new garden city” at Ebbsfleet in Kent
  • Legislation to give Welsh government tax and borrowing powers to fund infrastructure needs, including improvements to M4
  • £140m extra for flood defence repairs and maintenance
  • £200m made available to fix potholes

To read more, visit the Simpson Burgess Nash website, or BBC news.

 

 

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