News

The combination of late Autumn Statements and early spring leaks has left recent Budgets largely devoid of surprises. Many observers believed that the 2014 Budget would follow this trend, if only because the Budget deficit in 2013/14 was still £108 billion. However, George Osborne proved them wrong and revealed a Budget full of surprises which he said was aimed to assist ‘makers, doers and savers’. The changes to pensions caught most media attention with the prospect of pension pot owners being able to liberate further funds much earlier. As is becoming common place the actual rules that will apply will be published during the next year, following consultation.

We are already aware of two items that will change from 6th April 2014. The Annual Allowance reduces to £40,000 and the Lifetime Allowance reduces to £1.25 million.The decision to use a company to acquire or to continue to own UK property will require increased thought, so as to understand and appreciate both immediate and ongoing tax implications.

Here are some of the key highlights:

• From April 2015 individuals will be able to draw down from a defined contribution pension after age 55, subject to their marginal rates of income tax

• From 27th March 2014 the size of small individual pension pots that can be taken as a lump sum regardless of total pension wealth will increase from £2,000 to £10,000. From the same date, the number of small pots that can be taken as lump sums will increase from two to three

• From 1st July 2014 ISAs will be reformed and replaced by ‘NISAs’ (New Individual Savings Accounts) with a £15,000 annual contribution limit. Savers will now be able to choose the amount which can be invested in either cash or investments, whereas at present only half of your allowance can be in invested in cash

• The personal allowance is increased to £10,000 for 2014/15 and to £10,500 for 2015/16, with small reductions in the basic rate band for both years

• The inheritance tax threshold will remain at £325,000

• The main rate of corporation tax will be 21% from April 2014 and 20% from April 2015. The small profits rate will remain at 20% from April 2014

• The Capital Gains Tax annual exempt amount, currently £10,900, will rise to £11,000 in 2014/15 and £11,100 in 2015/16

• The final period of exemption for CGT private residence relief will be reduced from 36 to 18 months, in most cases from 6th April 2014

• The 15% stamp duty land tax rate on residential properties purchased by certain non-natural persons (eg companies) will be reduced and will apply to properties worth over £500,000 for transactions with an effective date from 20th March 2014. The existing £2 million threshold will apply, subject to exceptions, where contracts were entered into before that date

• Non-UK residents will be liable to CGT on gains accruing from April 2015 on disposals of UK residential property

• The Seed enterprise investment scheme (SEIS) is made permanent and new rules are introduced for venture capital trusts (VCTs) and enterprise investment schemes (EISs)

• The savings tax rate reduced from 10% to 0% and the savings rate band increased to £5,000, both from 2015/16

• The transferable tax allowance for married couples is set at £1,050 for 2015/16

•The cap on how much can be put into Premium Bonds will be increased from £30,000 to £40,000 from June 2014. The figure will then increase to £50,000 during 2015/16. If you wish to discuss the changes or your tax affairs in general, please contact your Relationship Manager who will introduce you to a member of our tax team

The information contained within this document is believed to be correct but cannot be guaranteed. Opinions constitute our judgement as at the date shown and are subject to change.