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Budget 2014 – an overview

Budget 2014 – an overview

Category: Economy

Updated: 20/03/2014
First Published: 20/03/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The 2014 Budget was announced yesterday, and whilst a lot of what was said was expected – increases to the personal allowance, help with childcare, etc. – there were a few surprises thrown in along the way. Chancellor George Osborne certainly pulled a rabbit or two from his hat by the end of it, so we thought we'd give you a quick overview of the key points.

  • The personal allowance, or the amount of income you receive before you start paying income tax, will rise to £10,500 next year.
  • The higher rate threshold, or the point at which higher earners will have to pay 40% income tax, will rise to £41,865 next month and then by a further 1% to £42,285 next year.
  • Inheritance tax will be abolished for members of the emergency services who lose their lives performing their duties.
  • Fuel duty will be frozen – a planned rise in September will no longer happen.
  • Tobacco duty will rise by 2% above inflation.
  • Alcohol duty escalator will be scrapped, beer duty will be cut by 1p per pint and duty on Scotch whisky and ordinary cider will be frozen.
  • Bingo duty will be halved to 10% while duty on gambling machines will be 25%.
  • Business rate discounts and enhanced capital allowances will be extended in enterprise zones for a further three years.
  • Small business grants will be extended to support 100,000 new apprenticeships.
  • Annual investment allowance for businesses will double to £500,000 until the end of 2015.
  • A package of measures will be introduced to cut energy bills for British manufacturers.
  • Stamp duty will rise to 15% for residential properties valued over £500,000 that are bought through a company.
  • Confirmation that the equity loan element of Help to Buy will be extended to 2020.
  • Support will be provided to build more than 200,000 new homes.
  • The 10p starting tax rate for low-income savers will be abolished.
  • The cap on investments in Premium Bonds will rise to £40,000 in June and to £50,000 next year.
  • The biggie – from 1 July, cash and shares ISAs will be merged into a single New ISA (NISA) with a tax-free allowance of £15,000, offering increased flexibility with no need to split the allowance between cash and shares.
  • There'll be a new Pensioner Bond paying market-leading rates – assumed rates are currently 2.8% for a one-year bond and 4% for a three-year option – available through NS&I to savers over the age of 65.
  • Big changes for the annuity market too – the income requirement for flexible drawdown has reduced to £12,000, while the capped drawdown limit will increase to 150%. The total amount of pension savings that can be taken as a lump sum has almost doubled to £30,000, and the maximum size of a small pension pot that can be taken as a lump sum has increased to £10,000 – all of which mean that annuities are no longer compulsory.
  • People who choose to take their pension pot early can still access the first 25% tax-free, but now the remainder can be accessed subject to nominal tax rates (typically 20%) and not the current 55%.
  • Pre-retirees will have access to free, impartial and face-to-face advice to help determine the best retirement income.
  • More plans to cap welfare payments (overall limit to be £119bn in 2015/16) and a clampdown on tax avoidance.
  • And, of course, a new £1 coin, designed in the style of the old threepenny bit with anti-counterfeiting technology. "A more resilient pound for a more resilient economy," said Mr Osborne.

Osborne said this is a Budget that's "backing a Britain that saves," ending his speech with the words "With the help of the British people, we're turning this country around." Well, it's certainly attracted a lot of attention, with savers and pensioners definitely coming out on top.

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