A few interesting snippets from the Chancellor’s recent Budget statement: –
The personal allowance is currently £8,105 and will go up to £9,440 from April this year. The Chancellor also announced that he is raising the allowance to £10,000 in April next year (one year earlier than expected), which means that almost 3 million of the lowest paid will not pay any income tax.
Individual Savings Accounts (ISAs)
The stocks and shares ISA limit will rise to £11,520 and the cash ISA limit will rise to £5,760 with effect from 6th April 2013.
Capital Gains Tax (CGT)
The current annual exemption from tax on capital gains of £10,600 will rise to £10,900 in tax year 2013/14.
The exemption allowance will increase by 1% a year in 2014-15 and 2015-16, to £11,000 from 6th April 2014 and £11,100 from 6th April 2015.
Inheritance Tax (IHT)
The Government confirmed its intention to freeze the inheritance tax nil rate band at £325,000 until April 2018. The expectation is that approximately 5,000 additional estates per year to become taxpaying estates by 2017/2018 due to this freeze. Therefore, non-abusive inheritance tax planning will become an important requirement for many clients for years to come.
The basic state pension will rise by 2.5% in April, taking it to £110.15 per week.
The Government has also announced it would introduce a single flat-rate pension of £144 a week in 2016.
As announced in the Autumn statement the Annual Allowance will reduce to £40,000 and the Lifetime Allowance will reduce from £1.5m to £1.25m in 2014-15.
National Insurance Contributions (NIC)
Every company in the UK is to be able to get up to £2,000 cut from their National Insurance Contributions (NIC), which means that they can hire someone on £22,000, and pay no jobs tax. This is intended to help small firms.
From April 2013 the Help to Buy: equity loan will be opened up to all those that aspire to own a new build home. It will: –
provide an equity loan worth up to 20% of the value of a new build home, repayment once the home is sold;
the maximum home value will be £600,000 and there will be no income cap constraint; and
ensure that the scheme is open not only to first time buyers but also to all those looking to move up the housing ladder.
The Help to Buy: mortgage guarantee is designed to increase the availability of mortgages on new or existing properties for those with small deposits. A temporary scheme that will run for three years form January 2014, will: –
increase the supply of high loan-to-value mortgages by offering a government guarantee to lenders who offer mortgages to people with between 5% and 20%;
be open not only to first-time buyers but also to existing homeowners, and have no income cap constraint; and
be available on homes with a value of up to £600,000.