Budget 2014: Personal Finances

Described as a “Budget for the makers, the doers, and the savers,” Chancellor George Osborne’s fifth budget delivered a range of measures encouraged to help personal finances. Here’s our summary of the key announcements.

Duties:

• The fuel duty rise planned for September 2014 will not take place
• Bingo duty will be halved to 10 per cent
• Tobacco duty will continue to rise at two per cent above inflation
• Alcohol duty will rise in line with inflation with the exception of Scottish whisky and cider, which are frozen
• Beer duty will be cut by one penny per pint.

Personal tax:

• As previously announced the personal tax allowance will increase to £10,000 a year from April 2014
• It will rise to £10,500 a year from April 2015
• The higher rate threshold will increase to £41,865 in April 2014 and to £42,285 in April 2015
• The transferable tax allowance for married couples and civil partners will rise to £1,050.

ISAs:

• Stocks and cash ISAs will be merged to create one New ISA
• A tax-free limit of £15,000 a year will come into effect from 1 July 2014
• The Junior ISA allowance will increase to £4,000 a year.

Pensioner Bond:

• A new Pensioner Bond will be issued by National Savings and Investment from January 2015
• Exact rates will be set in the autumn but are thought to be 2.8 per cent for a one year bond and four per cent on a three year bond.

Premium Bonds:

• The cap will be lifted from £30,000 to £40,000 in June 2014
• It will increase to £50,000 next year
• The number of million pound winners will be doubled.

Defined contribution pensions:

• Income requirement for flexible drawdown will be cut from £20,000 to £12,000
• The capped drawdown limit will increase from 120 per cent to 150 per cent
• The lump sum small pot will increase to £10,000
• The total pension savings you can take as a lump sum will increase to £30,000 from 27 March 2014.

Pensions:

• a guarantee of free, face-to-face impartial advice for retirees with defined contribution pensions
• tax on pension amounts taken as a lump sum, over and above the 25 per cent tax-free, will be charged at normal marginal rates rather than at 55 per cent.

Investment:

• Seed Enterprise Investment Scheme: the SEIS, designed to encourage equity investment in small, early-stage companies, is made permanent
• Social investment: a new 30 per cent Social Investment Tax Relief on investment in social enterprises is introduced.