Budget 2014

The Chancellor, George Osborne delivered his fifth Budget on 19^th March.  This pre-election Budget claimed to be one for the ‘makers, doers and savers’.

The independent Office of Budget Responsibility (OBR) now has GDP forecast to increase by 2.7% in 2014.  This is up from the 2.4% estimated at the time of the Autumn Statement in December (see Bulletin 12(13)) and substantially higher than the 1.8% previously forecast at the time of the 2013 Budget.  Despite the austerity measures of previous Budgets, the UK will still be in deficit this year.  The deficit is is forecast to be 6.6% of GDP the year, falling to 0.8% by 2017/18 and finally a predicted surplus of 0.2% in 2018/19.

In terms of specific policy measures that might be of interest to farming and other rural businesses;

• The Annual Investment allowance doubles to £500,000 from the 1^st April 2014 until the end of December 2015; it will then drop to £25,000.
• The Personal Allowance for Income Tax will increase to £10,000 for the 2014/15 tax year as previously announced; this will increase be a further £500 for the 2015/16 year.
• There are big changes to the pensions regime including the requirement to buy an annuity being scrapped.
• From the 1^st July 2014 Individual Savings Accounts (ISAs) will become New ISAs with the distinction between cash and shares abolished and a yearly limit of £15,000.
• The main Corporation Tax rate will fall from 23% to 21% from April 2014 as planned.  From April 2015 this will reduce to 20%, in line with the Small Profits rate.
• From April 2015 employers will not have to pay National Insurance Contributions for employees under the age of 21.  From 6^th April 2014 there will be a £2,000 yearly allowance for employers to offset against their NI contributions.
• The CGT annual exemption is increased to £11,000 for 2014/15; most other CGT rules remain unchanged.
• There will be changes where residential property is purchased and held through a company.  The thresholds for SLDT and the ‘Annual Tax on Enveloped Dwellings’ (ATED) will be reduced to £500,000.
• The threshold for VAT registration will increase to £81,000 from £79,000 from April 2014.