UK Budget 2014 date, predictions and how to watch live

We take a look at the all the Budget 2014 predictions and rumours and speculate on how this may affect you. The key points are outlined below.

When is the Budget?
The Chancellor will deliver his latest Budget on Wednesday 19th March from around 12:30 GMT. He usually makes a speech that lasts for about an hour or so, before handing over to Ed Balls, the Shadow Chancellor, who usually tries to pick holes in his plans and challenge what he has to say. It is normally one of the most raucous days of the year in the House of Commons, if you are worried that you will miss what he has to say due to MPs’ jeering, don’t worry, most of the immediate changes won’t take effect until April, the start of the new financial year.

Where can you watch the Budget live?
If you’ve got access to a TV, it’s shown live on Sky News and BBC News 24. At a computer you can watch it live on Yahoo Finance on our dedicated Budget 2014 page

What are the biggest issues facing the economy?
On paper, at least, it looks like Osborne may get a chance to deliver some good news. It is likely that the Office for Budget Responsibility will upgrade its growth forecast from 2.4% to 3.4%, which would be in line with the Bank of England’s forecast. Added to this the economy is likely to return to its pre-2008 peak sometime later this year.

But the good news may end there, the Government has pledged its credibility on bringing down our borrowing requirements and there is still some way to go to make a dent in our debts. Although the Chancellor is likely to laud the Government’s deficit reduction methods, the truth is that news on the deficit is not that encouraging.

Our budget deficit (the amount we overspend) was still more than 5.5% of GDP at the end of 2013. With lower productivity levels now compared with before the recession, the structural deficit (the amount that we have to borrow when adjusted for the economic cycle) is expected to remain high and we may need to borrow somewhere in the region of £100billion a year even after all of the austerity measures that have been in place since 2010.

What do we already know will be in the speech?
Although former Chancellor Nigel Lawson said that tax policy should be kept a secret, the nature of coalition politics means that by the time Osborne gets round to delivering his Budget speech, most of meaty bits have been leaked and debated in public anyway. Added to this, Osborne has signaled in prior Budgets some of the bigger changes to taxes that will come into effect this financial year:

1: A cut in corporation tax will become effective from April 1st 2014 (no, this is not a joke). This will see the rate of tax cut from 23% to 21%, it will fall to 20% next year.

2: Income tax: The personal allowance (the amount that you can earn before you start paying taxes) will rise to £10,000, which is effective from 6th April 2014. The allowance is also set to increase at the official rate of inflation (CPI) from next year onwards. The higher rate threshold will also increase by 1% from £41,450 to £41,865. This is less than the rate of inflation and means more people could find that their tax bill increases in the next financial year.

What are people calling for?
When it comes to the Budget, those who shout loud enough tend to get heard, which is not so great if you are the man on the street, but it’s good if you are a big company that hires expensive lobby groups.

Hence trade unions and business groups have already submitted their requests to the Chancellor, now they need to see if their wishes have been granted. A few of the requests include:

Manufacturing: This sector has bemoaned the escalating cost of energy for years. Since they know that the Government can’t reduce energy costs, they want a reduction in carbon taxes instead. They are also struggling to find qualified staff to work in factories etc so they have requested more Government-sponsored apprenticeship schemes.

Unions: The labour movement is calling on the Government to reverse the planned reduction in the corporate tax rate, saying the Government should instead focus on protecting living standards.  Since the corporation tax cut has been in the pipeline since the start of this Government, we think that the unions will be disappointed.

Business: They want the Government to focus on tax breaks in return for investment. Businesses can offset investment in offices, furniture etc, to the tune of £250,000 a year, however this is set to expire in 2015. Business lobby groups are looking for an extension. Another bug bear is air passenger duty, which can be as high at £400 a person. Businesses want this frozen, to ensure that Britain remains an attractive and affordable place to come and do business.

Banking: The British Bankers’ Association wants the Government to help boost savings rates by changing the current ISA scheme (tax free saving). It also want to encourage employers to set up workplace saving schemes that would see a portion of your pay cheque go straight to an ISA-like savings account.

Retailers: They are targeting a reduction in business rates, which they argue are killing off the UK’s high streets.

Housing: The housing industry is looking for ways to speed up the planning permission process. They are calling for more resources for local authorities to speed this up.

How will it affect me?
Although watching politicians tear into each other can be an amusing past time in itself, there are some important things that could affect all of us in this Budget including:

•    Those earning around £40,000 need to watch out as the increase in the higher tax threshold is 1%, lower than the current rate of inflation. If you are due a pay rise anytime soon be careful if you go over £41,865, the new threshold, since you could see your tax bill jump.

•    To offset this, the increase in the personal tax allowance to £10,000 should be good news for the majority of workers in the UK.

•    If you have are a working mother or father look out for more detail on a new system offering much-needed tax relief on childcare that will take effect from 2015.

•    Also, if you will still be below 25 in April 2015 then you could boost your chance of getting hired. The Government is expected to remove employer National Insurance contributions for those under 25 in an attempt to boost youth employment.

•    If you are thinking of selling your home then watch out for further details of the proposed reduction in capital gains relief if you are selling your principal private residence. The final three years of ownership has been exempt from capital gains tax, but this is expected to be reduced to 18 months from 6th April 2014.

Overall, Osborne has done a good job at signaling his Budget plans in recent years, and he also tends to stick to the same path. This reduces uncertainty about what to expect, but due to the lingering problem with the structural deficit, don’t expect Osborne to include too many freebies in his speech this year.

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Kathleen Brooks is author of Kathleen Brooks on Forex, published by Harriman House.