Earners will find the personal tax allowance will rise to £10,500 from April 2015, cutting taxes for 25 million people and taking an additional 290,000 people out of paying income tax altogether. The rises in the personal allowance since 2010, implemented by the Coalition Government, mean that by April next year a typical, basic rate, taxpayer will be paying £805 less in tax than they would have been, with 3,200,000 people taken out of income tax altogether. The 2014 Budget measures do not result in any additional higher rate taxpayers. The full benefit will be passed on to higher rate taxpayers – everyone earning up to £100,000 will gain equally and will pay less tax because of this tax cut.
Meanwhile, savers will benefit from merging the cash ISA and stocks & shares ISA into a single New ISA with an annual limit of £15,000. Over 400,000 ISA holders in the East Midlands could benefit from the New ISA. Savers will also be glad to hear the ten pence starting rate of tax for savings income will be eliminated and, this zero rate will be extended to the first £5,000 of savings income, benefiting 1.5 million low-income savers.
In the biggest reform of pensions taxation in a century, the Chancellor announced that no one would be forced to buy an annuity if they don’t want to and there will be no punitive fifty per cent tax rate if you try and take more than your tax free lump sum.
Drinkers will find savings as the tax on beer will be cut by a penny a pint, helping local pubs. Duties on Scotch whisky and other spirits will be frozen, as will duty on ordinary cider. The duty escalator for wine, meanwhile, has been abolished. Cllr. McNeill said:
“The budget contains real measures that are designed to help people across the country with their cost of living. Those in work will take home more of their pay, with the increase in the personal allowance. Those who save will find their hard-erned savings will be taxed less. The duty paid on beer has been cut by a penny on the pint for the second year running.
“Whilst the economic situation is beginning to show real signs of improvement, the parlous state of the nation’s finances – the legacy of the last Labour Government – mean that the Chancellor has and will continue to make the difficult decisions which benefit hard-working people across Britain and contribute to the long-term economic viability.”