Partner Article

Budget 2014: Good news for individuals and businesses

Tax experts at chartered accountants and business advisers Waltons Clark Whitehill have welcomed good news for individuals and businesses in today’s Budget.

George Hardey, Senior Tax Manager said: “The Personal Allowance has been increased by £500 to £10,500 from April 2015, which had been rumoured and is good news for everyone. However, the news is even better for higher rate tax payers, as the saving has been passed on in the form of an unexpected increase in the higher rate threshold. At first glance, a higher rate taxpayer could be approx. £160 a year better off.

“For businesses, the perhaps the largest tax giveaway was the increase in the Annual Investment Allowance (AIA). At present this gives immediate relief on the cost of equipment, plant and machinery etc up to a limit of £250,000 per annum. This was to be reduced to £25,000 per annum from January 2015 but has been scrapped and instead the limit will be doubled to £500,000 per annum until the end of 2015, with almost immediate effect. Caution is however required as the change is being made part way through the year, therefore, there will be complicated rules for accounting periods that span this change. Businesses therefore need to be careful and plan the date on which large purchases are made.

“Some people might think this limit is high and beyond what most businesses may spend. However, many people are not aware that when a business purchases its shop, office, factory etc then an element of it is likely to be eligible for the AIA. Businesses which could benefit from this must, therefore, plan in advance.

“There are a number of changes being made to ISAs which all appear to be good news. They are going to be more flexible and have a single increased limit of £15,000, regardless of whether it is a cash or stocks and shares ISA. This would appear very good news for more cautious savers whose limit for a cash ISA was previously half that of a stocks and shares ISA. When ISAs are used regularly over a number of years the amount of interest that can then be sheltered from tax, particularly higher rate tax, can become very worthwhile.

“There are lots of changes announced to the rules on pensions, much relaxation of the rules governing the way in which people can decide when and how to access the funds within their pension savings pots. One of the advantages of these changes is that it will prevent some people from otherwise effectively being forced into putting their funds into an annuity. Also, for smaller pension pots there will be the ability to take greater amounts out as a lump sum. In some circumstances this could represent double the previous limit, if not more.

“And finally…a new shaped pound coin; what will we all put in our supermarket trolleys??”

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This was posted in Bdaily's Members' News section by George Hardey .