Key Points of Budget 2014

Here are the key points of Chancellor George Osborne’s 2014 Budget.

Taxation

  • Point at which people start paying income tax will be raised to £10,500
  • Bingo duty will be halved to 10%
  • Threshold for 40p income tax to rise from £41,450 to £41,865 next month and by a further 1% to £42,285 next year
  • Inheritance tax waived for members of emergency services who give their lives in job
  • Tax on homes owned through a company to be extended from residential properties worth more than £2m to those worth more than £500,000
  • All long-haul flights to carry lower rate of air duty currently charged on flights to US

Savings

  • Cash and shares Isas to be merged into single New Isa with annual tax-free savings limit of £15,000 from 1 July
  • The 10p tax rate for savers abolished
  • Cap on Premium Bonds to be lifted from £30,000 to £40,000 in June and £50,000 next year

Pensions

  • All tax restrictions on pensioners’ access to their pension pots to be removed, ending the requirement to buy an annuity
  • Taxable part of pension pot taken as cash on retirement to be charged at normal income tax rate, down from 55%
  • Increase in total pension savings people can take as a lump sum to £30,000
  • New Pensioner Bond, paying “market-leading” rates, available from January to over-65s, with possible rates of 2.8% for one-year bond and 4% for three-year bond – up to £10,000 to be saved in each bond

Fuel, Alcohol and Tobacco

  • Fuel duty rise planned for September will not happen
  • Beer duty cut by 1p a pint
  • Duty on spirits and ordinary cider frozen
  • Tobacco duty to rise by 2% above inflation and this escalator to be extended beyond the next general election

State of the Economy

  • GDP forecast to grow by 2.7% this year and 2.3% next year, then by 2.6% in 2016 and 2017 and by 2.5% in 2018

Coinage

  • Twelve-sided £1 coin to be introduced in 2017

Welfare

  • Budget to be capped at £119bn for 2015-16, rising in line with inflation to £127bn in 2018-19.  The cap includes child benefit, incapacity benefit, winter fuel payment and income support – but does not include state pension and Jobseeker’s Allowance

Public borrowing/deficit

  • Deficit forecast to be 6.6% of GDP this year, 5.5% in 2014-15 then falling to 0.8% by 2017-18 with a surplus of 0.2% in 2018-19
  • Borrowing forecast to be £108bn this year and £95bn next year, leading to a surplus of almost £5bn in 2018-19
  • A new charter for budget responsibility to be brought in this autumn
  • Promises to make permanent £1bn reduction in government department overspends

Business

  • Lending for exporters doubled to £3bn and interest rates on that lending cut by a third
  • Business rate discounts and enhanced capital allowances in enterprise zones extended for three years

Housing / Infrastructure

  • Help to Buy equity scheme for new-build homes extended to 2020
  • Support for building of more than 200,000 new homes
  • £270m guarantee for Mersey Gateway bridge
  • Legislation to give Welsh government tax and borrowing powers to fund infrastructure needs, including improvements to M4
  • £140m extra for flood defence repairs and maintenance
  • £200m made available to fix potholes
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