Written by Ray Coman
With a general election fixed for 7 May 2015, this will be the last full tax year of the current coalition. Many of the changes to take effect from today were announced in the 2014 Budget, although some had been scheduled from much earlier. The main changes effective 2014-15 include:
- A fall in the full rate of corporation tax from 23% to 21%
- An increase in the personal allowance from £9,440 to £10,000, but a reduction in the basic rate band of tax by only £145.
- A rise in the VAT registration threshold from £79,000 to £81,000.
- An increase in ISA limit (on 1 July) to £15,000, all of which can be invested in cash.
- Reduction in lifetime allowance for pension funds to £1,250,000 from £1,500,000.
- A drop in annual allowance for pension contributions from £50,000 to £40,000.
- Relaxation about the rules governing withdrawal of pension income.
- The final period of deemed occupation of a principal private residence reduces to 18 months.
- The annual allowance for the purchase of capital assets by a business increases from £250,000 to £500,000.
The changes include good news for savers and people with pensions and further stimulus for business. However, at a time where property and assets values in certain areas have risen sharply, the lack of change in the tax thresholds creates risk for investors.
In summary, the freeze on capital taxes will expose greater numbers to an increased burden of tax on wealth and property.
Coman & co are pleased to offer a summary of the new rates and allowances, which are key references for tax planning in the coming year. Please contact us for a further discussion about your upcoming tax requirements.