Personal and trust taxation 2014

Income tax allowances and reliefs 2014/15 2013/14
Personal (basic) £10,000 £9,440
Personal allowance reduced by 50% of income over £100,000 £100,000
Personal if born between 6/4/38 and 5/4/48 £10,500 £10,500
Personal if born before 6/4/38 £10,660 £10,660
Personal if born before 6/4/48 reduced by 50% if income exceeds £27,000 £26,100
Married couples/civil partners (min) at 10%* £3,140 £3,040
Married couples/civil partners (max) at 10%* £8,165 £7,915
Child benefit charge:
– 1% of benefit for every £100 of income between £50,000 and £60,000
Blind person’s allowance £2,230 £2,160
Rent-a-room tax-free income £4,250 £4,250
Venture capital trust (VCT) rate of relief 30% 30%
– Maximum investment £200,000 £200,000
Enterprise investment scheme (EIS) rate of relief 30% 30%
– Maximum investment £1,000,000 £1,000,000
– EIS eligible for capital gains tax (CGT) deferral relief No limit No limit
Seed EIS (SEIS) rate of relief 50% 50%
– Maximum investment £100,000 £100,000
– SEIS eligible for CGT reinvestment relief 50% 50%
Registered pension scheme:
– annual allowance £40,000 £50,000
– lifetime allowance £1,250,000 £1,500,000
* Where at least one spouse/civil partner was born before 6/4/35.
Income tax rates 2014/15 2013/14
Starting rate of 10% on savings income up to** £2,880 £2,790
Basic rate of 20% on income up to £31,865 £32,010
Higher rate of 40% on income £31,866-
£150,000
£32,011-
£150,000
Additional rate on income over £150,000 45% 45%
Dividends for:
– basic rate taxpayers 10% 10%
– higher rate taxpayers 32.5% 32.5%
– additional rate taxpayers 37.5% 37.5%
Trusts:
– standard rate band generally £1,000 £1,000
– dividends (rate applicable to trusts) 37.5% 37.5%
– other income (rate applicable to trusts) 45% 45%
** Not available if taxable non-savings income exceeds the starting rate band.

 

Income tax – personal allowance and basic rate band

For 2014/15, the personal allowance will rise from £9,440 to £10,000 and there will be a £145 reduction in the basic rate band from £32,010 to £31,865. For 2015/16, the personal allowance will rise by £500 to £10,500 and the basic rate band will be cut by a further £80 to £31,785. There will be a consultation on whether and how the personal allowance could be restricted to UK residents and those living overseas who have strong economic ties to the UK.

Transferable tax allowances for married couples

From 2015/16, married couples and civil partners will be able to transfer £1,050 of their income tax personal allowance to their spouse or civil partner. Couples will be eligible to transfer where neither partner is a higher or additional rate taxpayer. The transferable amount will be set at 10% of the personal allowance for each tax year.

 


SAVER – Protect your personal allowance. In 2014/15, your personal allowance is reduced by 50p for every pound your income is over £100,000. If you can reduce your income below £100,000, e.g. by making a pension contribution or choosing tax-efficient investments, you should benefit from the full allowance.


 

Starting rate for savings income

From 2015/16, the maximum amount of an eligible individual’s savings income that can qualify for the starting rate of tax for savings will be increased from £2,880 (2014/15) to £5,000. The starting rate will simultaneously be reduced from 10% to nil.

Tax-free childcare scheme

Parents will be able to claim 20% support for the cost of childcare up to £10,000 a year for each child. This means that the maximum tax benefit for each child will be £2,000. From autumn 2015, the scheme will be rolled out to all eligible families with children who are under 12 within the first year of the scheme’s operation.

Class 2 national insurance contributions (NICs)

From April 2016, Class 2 NICs for the self-employed will be collected through self-assessment.

Beneficial loans to employees

The limit for the small loans exemption will be increased from £5,000 to £10,000 from April 2014, as previously announced.

Tax exemption for employer-funded occupational health treatments

As previously announced, a tax exemption will be introduced for amounts up to £500 paid by employers for medical treatments for employees. The tax exemption is expected to become available in October 2014.

Taxation of major sporting events

Income and corporation tax relief will be available by secondary legislation for major sporting events.

Social investment tax relief

Social investment tax relief will be 30% from 6 April 2014. Under the scheme, eligible organisations will be able to receive up to €344,827 of tax-advantaged investment over three years.

Share incentive plans and save as you earn (SAYE)

From April 2014, the share incentive plans annual limits will increase to £3,600 a year for free shares and to £1,800 a year for partnership shares, as previously announced. At the same time, the maximum monthly amount that an employee can contribute to SAYE arrangements will increase from £250 to £500.

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