Chesterfield Bookkeeping Services
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bookkeeping and accountancy services for the Chesterfield area

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Income tax . . .
The rise in the personal allowance to £10,000 in April 2014 had already been announced but we now know there will be a further increase to £10,500 in April next year.  The rate at which the 40p tax comes in has been raised slightly from £41,450 at present to £41,865 in April.
 
The tax that has to be paid however, is based on the following calculation. Personal allowance is subtracted from gross income to give "taxable income" and the first band of taxable income is taxed at 20%.  The first band will actually be the figure of £41,865 minus £10,000 or £31,865.  Currently, this band is £41,450 minus £9,440 which is £32,010.  
 
This is the point that many have objected to - the amount of taxable income taxed at the basic rate has gone down, which is why they talk about more people being dragged into the 40p bracket.  For April 2015, we know that the personal allowance is going up to £10,500 and the 40p comes in at £42,285.  A quick calculation £42,285 minus £10,500 gives the basic rate band of £31,785 which is less than the band that comes in on April.
 
For those interested in the esoteric - there has been a 10p tax rate on savings income applied to the first £2,000 of taxable income, which itself only applied if there was less than £2,000 of taxable earnings.  In other words, if your earned income after deducting the £9,440 personal allowance comes to less than £2,000, then if you had any savings interest the remainder up to the £2,000 would be taxed at 10%.  This has been abolished so that all savings interest will be taxed at whatever marginal rate the taxpayer is paying tax at - remember that earned income is considered first, then savings income.
 
 
 
ISA . . .
Although no relief for savers generally in the way of rising interest rates, the ISA has been given a facelift. From 1 July not only will there be an increase to £15,000, but the cash and share ISAs are being merged.  Having two types was always a bit illogical with all sorts of complicated rules about transferring one to the other.  Now they are to be treated as one entity, and any amount of shares or cash or combination of the two can be kept up to an annual £15,000 in total, with transfers from one to the other allowed in any order.
 
For pensioners, the government are bringing out two new bonds - a 1 year bond paying 2.8% and a 3 year bond paying 4%, which are better than what you can get on the high street.  The only catch is you do have to be over 65.
 
 
Duty . . .
 If you like to take long haul flights, a bit of good news is that passenger duty will be generally lowered to bring all long haul flights in line with flights to the US.
 
1p off the pint of beer is better than nothing, and duty on spirits and cider will be frozen.  
 
The contentious fuel duty escalator still exists, but the planned increase in fuel duty for September will not take place.  Whether it is cancelled or merely postponed is uncertain.
 
Personal pensions . . .
There will no longer be a requirement to buy an annuity.  Currently, pensioners were forced to buy an annuity creating a distorted market in which greedy providers ripped off their clients.  Now, pensioners can have access to their pension pots and will be taxed at their normal marginal rates.  It will be interesting to see what effect this has on the level of service provided by aforementioned annuity providers.
 
 
 
 
 

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