2014 Budget – A Round Up of the Issues

s216_George_Osborne

A Quick Analysis

Whilst a discount in business rates for those companies in enterprise zones is welcomed, the general consensus is that not enough was done to help the commercial property market. Despite a landmark high court ruling in June 2012 that effectively legalised “imaginative” empty rates avoidance tactics, empty rate charges and the postponed revaluation of business rates until 2017 has unfairly affected the sector. For the residential market, the measures to extend the Help to Buy scheme are likely to stimulate the demand for housing but the Budget doesn’t go far enough to ensure there are enough properties to meet the demand and there was a complete failure to over haul stamp duty in order to get more buyers entering at the lower end of the market.

Main Measures

  • Cap on welfare payments – setting the overall limit at £119bn in 2015-16, excluding state pensions and unemployment benefits.
  • From midnight tonight anyone purchasing residential property worth over half a million pounds through a corporate envelope will be required to pay 15% stamp duty.
  • Waiving of inheritance tax for emergency services who give their lives protecting us.
  • Relief of VAT on fuel for Air Ambulances and Inshore Rescue boat services across Britain, and provision of a new air ambulance for London.
  • Expansion of the new tax introduced to stop people avoiding stamp duty by owning homes through a company, from residential properties worth over £2 million to those worth more than £500,000.
  • From next year, all long haul flights will carry the same, lower, band B tax rate currently paid on flights to the United States.
  • Interest rates to exporters will be cut by a third.
  • The OBR has revised down forecast tax receipts from North Sea Oil, these further downgrades in the tax receipts would leave independent Scots with a shortfall of £1,000 per person.
  • A new garden city will built at Ebbsfleet, new homes in Barking Riverside and a regeneration of Brent Cross.
  • People will have a new “right-to-build-your-own home.”
  • The equity loan element of the current Help to Buy scheme (which started a year ago) will now last until 2020.
  • Altogether, the housing policies announced today will support over 200,000 new homes for families.
  • £200m pot announced to help councils repair potholes.
  • The Alan Turing Institute will be set up to pioneer computing research in the UK again.
  • New legislation to give new tax and borrowing powers to the Welsh Government to fund their infrastructure needs, and they can start now on work to improve the M4 in South Wales.
  • The government will extend the grant for small businesses to support 100,000 more apprenticeships.
  • Business rates discounts and enhanced capital allowances will be extended in enterprise zones for another three years.
  • The Annual Investment Allowance for companies will be expanded to £500,000 (at a cost of £2bn), until the end of 2015.
  • A £7bn package to cut energy bills for British manufacturers.
  • Fuel duty rise planned for September will not take place.
  • Bingo duty will be halved to 10%.
  • Fixed odds betting terminals in bookies will now be taxed at a higher rate of 25%. The horserace betting levy will also be extended to bookmakers who are based offshore.
  • Tobacco duty will rise by 2% above inflation.
  • Alcohol duty will be frozen on whisky and ordinary cider.
  • Beer duty will be cut by one pence.
  • The 2015 personal allowance, this will rise from £10,000 to £10,500.
  • The higher rate threshold will rise next month, from £41,450 to £41,865, and then by a further 1% to £42,285 next year. The benefit of the personal allowance increase will be passed on to higher rate taxpayers.
  • New pensioner bond available to anyone aged over 65. Up to £10bn of these bonds will be issued. A maximum of £10,000 can be saved in each bond.
  • Cash and stocks and shares ISAs will be merged into one New ISA. The annual limit for saving in an Isa will be raised to £15,000.
  • If people choose to take their pension pot early, instead of 55%, it will be taxed at a normal marginal tax rate – typically 20%.
  • The 10 pence rate for savers will be abolished altogether.
  • Big changes to pensions: The income requirement for flexible drawdown will fall from £20,000 to £12,000; the capped drawdown limit will fall from 120% to 150%; the size of the lump sum small pot will rise five-fold to £10,000; and the total pension savings you can take as a lump sum will almost double to £30,000.
  • Flooding support with £140m focused on maintenance works.
  • Corporation tax down to 21% this year and 20% next year.
  • £270m guarantee for Mersey Gateway bridge.
  • £150m regeneration fund for large estates.

 

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