A boring budget for business

20th March 2014

The budget yesterday had some great news regarding pensions and savings but wasn’t so good for small businesses like ourselves!

Here are the key points from the budget:

Personal Tax

As expected the personal allowance is going to rise to £10,000 from April 2014 and then again to £10,500 in April 2015. This 5% increase is good news as it will result in a £100 tax saving in 2015/16 for basic rate taxpayers.

The Chancellor seemed to be making a big thing of increasing the higher rate threshold from £41,450 to £41,865 next month. However, given that this is only a 1% increase which is below the rate of inflation, I think this is actually bad news for higher rate tax payers. This 1% increase will also apply in 2015/16.

From 2015/16 married couples and civil partners will be able to transfer £1,050 of their personal allowance to their partners. This is only eligible if neither partner is a higher rate tax payer.

Savings

The good news for savers is that the ISA system is to be simplified and the annual allowance is to be increased to £15,000 in July. The cap on Premium bonds is to be lifted from £30,000 to £40,000 in June and then £50,000 the following year.

Business

The Annual Investment Allowance (tax relief on buying capital equipment) has increased to £500,000 to encourage large businesses to invest in equipment.

The Chancellor confirmed the continuation of funding for Apprenticeships which is good for small businesses that employ staff.

The introduction of the employment allowance of £2,000 for business to set against their employers national insurance bills from April 2014.

Small Business Rate Relief is extended for a year to 31 March 2015.

Loans to employees – loans to employees or directors whch are provided interest free are considered a taxable benefit. Loans under £5,000 are exempt from this and the exemption is being extended to loans up to £10,000.

An exemption will be introduced in late 2014 for medical treatments paid by the employer on behalf of employees.

VAT registration threshold increases from £79,000 to £81,000 from 1st April.

Directors of owner managed companies can increase their base monthly salary to £663 without incurring tax or National Insurance.

Parents

From September 2015 parents will be able to claim 20% support for the cost of childcare up to £10,000 a year (total benefit £2,000 a year) for each child under 12.