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Budget 2014: what was hidden in the small print
Chancellor George Osborne has delivered his 2014 speech to Parliament. However, as is always the case with Budgets, there were a lot of measures that weren't announced at the dispatch box.
This time there wasn’t too much major hidden in the small print, probably because the rump of spending cuts had been announced in previous speeches.
Here are some of the most important changes.
Tax allowances
Among all the fanfare about the increase in the tax-free personal allowance to £10,500 from next year, the Chancellor did a little bit of sleight of hand. He announced an increase in the higher (40%) rate to £41,865 in 2014 and then £42,285 in 2015. However, this had already been previously announced in the 2012 Autumn Statement, as the Budget Book confirmed.
The Budget Book also says that the personal allowance is to be restricted to UK residents and people “living overseas who have strong economic connections in the UK”.
National Insurance Contributions
From April 2016, Class 2 National Insurance Contributions from the self-employed will be collected through self-assessment tax returns.
ISAs and Child Trust Funds
Peer-to-peer loans will be eligible to be included in ISAs, although it hasn’t been confirmed when. It also states: “The Government will continue to explore further extending the list to include debt securities offered via crowdfunding platforms.”
Meanwhile, core capital deferred shares can be included in ISAs from 1st July. These are offered in mutuals such as Nationwide and are similar to ordinary shares in that they pay dividends. However, the dividend is often capped. You also don’t have voting rights based on the number of shares you hold – it’s one membership per quantity of shares bought.
Elsewhere, the annual limit for Child Trust Funds is to be increased to £4,000 from 1st July in line with Junior ISAs.
Pensions
Arguably the biggest news of Budget 2014 was the greater flexibility future retirees will have when it comes to their pensions.
However, those in defined benefit schemes, or final salary schemes as they are better known, will not be able to transfer to defined contribution, or money purchase, schemes – for now at least. The Government is consulting on the possible implications.
Simple financial products
We haven’t heard much on the introduction of a set of so-called ‘simple’ financial products. However, an accreditation process is underway and we can expect to see what this looks like at the end of the year.
Fuel and van benefit charge
From 6th April 2015 the fuel benefit charge multiplier for cars and vans, where employers pay for fuel for private use, will increase by the Retail Prices Index (RPI) measure of inflation.
Similarly, the van benefit charge will increase by RPI from 6th April 2015, while the charge for zero emission vans will drop dramatically from 2015-16 onwards.
Carer’s Allowance
The earnings limit for this benefit to be paid will increase to £102 per week from May 2014.
