Today the Chancellor of the Exchequer George Osborne delivered his 2014 Budget to the House of Commons.
In his opening speech the Chancellor said: “If you are a maker, a doer or a saver, this budget is for you.”
In previous years savers have been highly impacted by the struggling economy with record low interest rates. As the economy begins to recover the Government pledge to give something back to those who have provided their own economic future.
Taxation and saving key points:
- The point at which people start paying income tax will be raised to £10,500 per annum
- Inheritance tax will be waived for members of emergency services who give their lives to their jobs
- Transferable tax allowance for married couples to rise to £1,050.
- Cash and stocks ISAs to be merged into single New ISA with annual tax-free savings limit of £15,000 from July 1.
- Limit for Junior ISA raised to £4,000.
- New Pensioner Bond paying market leading rates to be available from January to all over 65s, with possible rates of 2.8 per cent for one-year bond and 4 per cent for three-year bond.
- Cap on Premium Bonds to be lifted from £30,000 to £40,000 in June and £50,000 in 2015, and number of £1million winners to be doubled.
- Tax on homes owned through a company to be extended from residential properties worth more than £2m to those worth more than £500,000
- All long-haul flights to carry lower rate of air duty currently charged on flights to US
- Abolition of 10p starting rate of tax on income from savings.
In what is already being coined “The Granny Tax” tax changes are being implemented to boost pensioners.
Changes for Pensioners
- Tax on cash taken out of pension pot on retirement to be reduced from 55 per cent to 20 per cent.
- All tax restrictions on pensioners’ access to their pension pots to be removed, ending the requirement to buy an annuity.
- Increase in total pension savings people can take as a lump sum increased to £30,000
A surprise for those that enjoy the odd tipple and in support of the Scotland whiskey industry and South West cider industry duty has been frozen.
- Fuel duty rise planned for September ‘will not take place’.
- Tobacco duty to rise by 2% above inflation
- Beer duty cut by 1p a pint.
- Duty on cider frozen.
- Duty on whiskey frozen
- Duty on other spirits frozen
- A £7billion package to cut energy bills includes £18 per ton cap on carbon
- price support rate from 2016 to the end of the decade, saving medium-sized
manufacturer £50,000 and families £15 a year.
The Chancellor also promised support to new home buyers and those wanting to build their own.
Housing key points:
- Help to Buy scheme extended to 2020
- Support for building of more than 200,000 new homes
An area that had little support in this years Budget was businesses with little help offered to start-ups and SMEs. George Osborne remarked: “Today we back businesses who invest and export”.
Business key points:
- Lending for exporters doubled to £3bn and interest rates on that lending cut by a third.
- Business rate discounts and enhanced capital allowances in Enterprise Zones extended for three years.
There was good news delivered about the economy. The GDP forecast this year is set to grow by 2.7%, It was forecast to be 1.8% in the last budget – the biggest upwards revision to growth forecasts in 30 years.
Economy key points:
- GDP forecast to grow by 2.7% this year and 2.3% next year, then by 2.6% in 2016 and 2017 and by 2.5% in 2018.
- Borrowing expected to be £108billion this year – £12billion less than forecast a year ago.
- Deficit forecast to be 6.6% of GDP this year, 5.5% in 2014-15 then falling to 0.8% by 2017-18 with a surplus of 0.2% in 2018-19