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Budget 2014 Commentary

 

Posted on 19 March 2014

Chancellor George Osborne delivered the fourth coalition Budget to Parliament today.

A summary of the main points is set out below:

  • Action on tax evasion including more cash for the HMRC and new powers for it to collect from bank accounts
  • Annual investment allowance doubled to £500,000 and extended until the end of 2015
  • Corporation tax down from 23% to 21%, and then down to 20% next year
  • Extended grants for small businesses to take on an extra 100,000 apprentices, and also introduce degree level apprenticeships.
  • Extension to enterprise zone benefits for a further three years
  • Extending Help to Buy for the rest of the decade
  • Changes to the export finance system - double amount available to £3bn and lower interest rates
  • £7billion package to cut energy bills for manufacturers and other businesses
  • Incentives for housebuilding with £500m finance for small housebuilders
  • Reform to Air Passenger Duty with all long haul flights carrying the same lower band as flights to the US
  • Inheritance tax waived for emergency services staff who die whilst at work

Head of Tax Jackie Hendley commented: “Today’s budget has continued with the Government’s and HMRC’s theme of cracking down on tax avoidance. At present, it is often the case where amounts of tax which are at stake are in dispute or under enquiry with HMRC, that taxpayers are not required to pay the disputed tax over until the enquiry has been resolved.  New regulations are being introduced requiring those who have entered into tax planning which falls within the disclosure rules, or tax planning perceived to fall within the General Anti-avoidance provisions introduced last year, to pay over tax up front to HMRC. This amount will only be refunded once the enquiry has been closed. This applies where there is an open enquiry or open appeal. This measure will impact on cash flow and, is likely, to be another deterrent to taxpayers to undertake such planning. The regulations appear to also catch tax planning which has been done before budget day and, as such, taxpayers who are caught will need to assess their position immediately.

As regards encouraging investment, the chancellor has announced that the expenditure on which Annual Investment Allowances can be claimed, whereby companies can claim 100% allowances on certain capital expenditure, has been doubled from £250,000 per annum to £500,000 per annum and the period over which these are available has been extended to 31 December 2015. Thresholds for ISA investments have also been increased to £15,000 per annum.

Overall a continued focus on tackling tax avoidance as well as encouraging investment.” 

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