In a speech full of sound bites, the Chancellor’s 2014 Budget repeated past themes – the need to build a resilient economy and for Britain to live within its means. But his dominant message was new: this was a Budget for “the makers, the doers and the savers”.
Starting with the makers, George Osborne emphasised the need for British businesses “to export more, build more, invest more and manufacture more”. He outlined a range of supportive measures, such as enhanced export finance, an increase in the R&D tax credit for loss-making small businesses, a doubling of the Annual Investment Allowance to £500,000, and policies to cut energy costs.
For the doers, the Chancellor announced measures to “help hard-working people keep more of what they earn”. These included a rise in the personal allowance to £10,500 from April 2015, raising the 40p threshold, a cancellation of the fuel duty rises planned from September, and freezes or cuts for certain alcohol duties. His announcement of a penny off a pint of beer for the second year running raised a moderate cheer!
More eye-catching were the tax changes to help savers, such as the abolition of the 10p starting rate on savings income and a doubling of the zero-rate band. There were surprise ISA reforms too. In future, savers will be able to hold cash and stocks in the same ISA, and make transfers freely between cash and stocks. The annual ISA limit will increase to £15,000 and the Junior ISA limit will rise to £4,000, both taking effect from July this year.
A new pensioner bond is to be launched to help those in retirement and, for those still working, the government is planning substantial reform of the tax rules for defined contribution pension schemes. After some interim tweaks, future legislation should remove all remaining restrictions on accessing defined contribution pension pots. In future, the Chancellor said, no one will have to buy an annuity.
Building to a rousing close designed to encourage Coalition backbenchers and taxpayers alike, George Osborne declared: “You have earned it, you have saved it and this government is on your side.”
Business tax team
Private client tax team