Income tax: personal allowance in 2014-15 – As announced at Budget 2013, the income tax personal allowance will be increased to £10,000 from April 2014. The higher rate threshold will be increased to £41,865 and the basic rate limit will be set at £31,865, in line with the Autumn Statement 2012 decision to increase the higher rate threshold by 1% in 2014-15 and 2015-16. The National Insurance upper earnings and upper profits limits will be increased in line with the higher rate threshold. The basic, higher and additional rates of income tax for 2014-15 will remain at their 2013-14 levels. (Finance Bill 2014) (az)
Income tax: personal allowance in 2015-16 – The government will increase the income tax personal allowance to £10,500 in 2015-16. The higher rate threshold will be increased to £42,285 and the basic rate limit will be set at £31,785 in line with the Autumn Statement 2012 decision to increase the higher rate threshold by 1% in 2014-15 and 2015-16. The personal allowance will be increased by CPI from 2016-17. (Finance Bill 2014) (3)
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 where neither partner is a higher or additional rate tax payer will be eligible to transfer. The transferable amount will be set at 10% of the personal allowance in each tax year. (Finance Bill 2014) (4) (a)
Tax exemption for employer-funded occupational health treatments – As announced at Budget 2013 the government will introduce a tax exemption for amounts up to £500 paid by employers for medical treatments for employees. The tax exemption is expected to become available with the rollout of the Health and Work Service in October 2014. (Finance Bill 2014) (ax, ay)
Employer provided benefits in kind: beneficial loans – As announced at Budget 2013, the threshold for the small loans exemption limit will be increased from £5,000 to £10,000 from April 2014. (Finance Bill 2014)
National Minimum Wage – The Low Pay Commission’s (LPC) recommendations for increases in the National Minimum Wage (NMW) rates have been accepted by the government. The adult NMW rate will increase by 3% to £6.50 from October 2014, representing the largest cash increase since 2008 and the first real terms increase since 2007. There will also be increases of 2% for the youth and apprentice NMW rates from October 2014. As a result, over a million people will see a pay increase.63 Beyond 2014, the LPC has made clear that it shares the government’s aim for further real terms increases beyond this, with the real value of the minimum wage restored and exceeded in time, provided economic conditions continue to improve.
Budget 2014 confirms that the Tax-Free Childcare costs cap, against which parents can claim 20% support, will be increased to £10,000 per year for each child. This will mean that eligible parents can now benefit from greater support, worth up to £2,000 per child each year. At the same time the government is rolling out Tax-Free Childcare more quickly than previously announced. From autumn 2015, the scheme will be rolled out to all eligible families with children under 12 within the first year of the scheme’s operation.
Corporation tax: rates – As announced previously, the main rate of corporation tax will be reduced to 21% from April 2014 and 20% from April 2015. (Finance Bill 2014) (av, bi)
Corporation tax: small profits rate – The small profits rate of corporation tax will remain at 20% from April 2014. (Finance Bill 2014)
Employment intermediaries facilitating false self-employment – As announced at Autumn Statement 2013, the government will amend existing legislation to prevent employment intermediaries being used to avoid employment taxes by disguising employment as self-employment, with effect from April 2014. (Finance Bill 2014) (s)
Offshore intermediaries – As announced at Budget 2013 the government will amend and strengthen existing legislation to ensure the correct income tax and NICs are paid by offshore employment intermediaries with effect from April 2014. (Finance Bill 2014) (bb)
Partnerships review – The government will introduce legislation that will take effect from April 2014 to counter the disguising of employment relationships in limited liability partnerships and prevent the tax motivated allocation of business profits to corporate partners which are generally taxed at lower rates than individuals. (Finance Bill 2014) (w) (bc)
Self-service time to pay – The government will introduce a new online system to enable people in financial difficulty to set up a payment plan for self-assessed income tax.
Simplifying self-employed National Insurance contributions (NICs) – Following a consultation announced at Budget 2013, from April 2016 Class 2 NICs for the self-employed will be collected through Self-Assessment.
Government response to the Office of Tax Simplification (OTS) review of employee benefits and expenses – In response to the OTS review of employee benefits and expenses, the government will consult on 4 simplifications including abolishing the £8,500 threshold, voluntary payrolling of benefits, a trivial benefits exemption and a general exemption for non-taxable expenses. The government also intends to review the rules underlying the tax treatment of travel and subsistence expenses, and will call for evidence on remuneration practices to inform any future reforms. (Future Finance Bill)
Construction Industry Scheme (CIS) – The government will consult in summer 2014 on options to improve the operation of the CIS for smaller businesses and to introduce mandatory on-line filing for contractors. The government will also hold discussions with industry on revisions to reporting obligations and improvements in registration for joint ventures.