The 2014 UK Budget has now been delivered. Taking a total of 55 minutes to get through the statement, Chancellor George Osborne led a Budget aimed squarely at savers and pushed the issue of growth, reduction of deficit and opportunity.
Key announcements include:
- Introduction of new one pound coin from 2017 - set to combat forgery of the current coin in circulation. £45 million worth of one pound coins out there are fake.
- Energy bills to be reduced with new £7bn package - saving families around £15 per year - but manufactures can save from £50,000 per annum.
- Personal allowances are set to rise to £10,000 from April 2014 - this was previously announced. It is however confirmed that the tax free allowance for people born after 5th April 1948 is to rise to £10,500 from April 2015. People born before that date continue to have their allowances frozen as last year.
- The higher rate threshold will continue to fall in response to rises to the personal allowance. This year, the band starts at £31,865 - a fall from £32,010. Next year the band falls again to £31,785. No adjustments to the the higher rate or pushing of the band upwards as was speculated.
- Savings income has a major change. From April 2015, people with non-savings income of below £5,000 will have a savings income rate of 0% applied to the first £5,000 of savings income (bank or building society interest).
- Transferable tax free allowances to come in from April 2015, will be set at 10 percent of the basic personal allowance. So, £1,050 can be transferred between partners for 2015.
- Inheritance taxes waived for people working in the emergency services who lose their lives in work.
- The welfare cap to be £119bn for the 2015 tax year - and thereafter rising with inflation. The cap excludes JSA and the state pension.
Alcohol and Tobacco
- Beer duty once again dropped by one penny - effective next week.
- Spirits, wine and cider duty frozen.
- Tobacco duty to continue to rise by 2% - on health grounds.
Savings and Pensions
- Premium bonds cap raised by £10,000 to £40,000 from June 2014 - and up to £50k in 2015.
- From this July, the current cash and stocks ISA's will be merged into a new ISA, renamed to NISA. The annual investment limit will be raised to £15,000. The NISA can have up to 100 percent of the allowance invested in cash or stocks (in any proportion). Junior ISA limits will be raised to £4,000.
- Pensioners drawing their pension fund no longer required to purchase an annuity.
- Up to 25 percent of pension can be drawn as lump sum tax free - but above that amount is now chargeable to tax at the marginal rate (normal bands), rather than the previous punitive 55 percent.
- Pensioners to have access to a new 'Pensioner Bond'. Rates available from 2.8 to 4.0 percent depending on length of bond - and up to £10,000 can be invested in each bond.
- OBR states growth higher than expected and country to be in budget surplus in 2018, equivalent to £5bn.
- People attempting to avoid stamp duties by purchasing residential property through companies to see previous stamp duty threshold on property worth over £2 million applied to property worth more than £500,000.
- Annual Investment Allowance raised to £500,000 to the end of 2015.
- Enterprise zones see business rate discounts and raised allowances extended for another 3 years.
- VED bands over 130g/km will be increased by £5 per year - with £10 increase over 225g/km.
- Fuel duty rise for September 2014 scrapped.
- Air Passenger Duties to be standardised for long haul flights, so all long haul flights to carry the same lower rate as trips to the US incur.