George Osborne presented his Budget 2014 saying it was “a budget for the makers the doers and the savers”, here is a look at the main points that directly affect payroll.
Personal tax allowance will reach £10,000 in April 2014 and rise to £10,500 from April 2015 “We will have lifted 3m of the lowest paid out of income tax altogether,” said Osborne.
The higher rate threshold will rise to £41,865, and then up 1% again in 2015. “And because I am also passing the full benefit of today’s personal allowance increase on to higher rate taxpayers – people earning £42,000, £50,000, £60,000, all the way up to £100,000 will be paying less income tax because of this Budget,” said Osborne.
Employer National Insurance payments for young workers under 21 are abolished. The new announcement for under 21s means that the cost of employing a young person at a salary of £12,000 will be reduced by £500, Osborne claimed.
Recommendation of the Office of Tax Simplification accepted and the collection of class 2 NICS to be turned into self-assessment.
On tax avoidance Osborne said the government would increase HMRC’s budget to stop non-compliance. He said: “We will give HMRC modern powers to collect debts from bank accounts of people who can afford to pay but have repeatedly refused to, like most other Western countries.”
There were also radical changes to pensions and savings that were not expected. These include that cash and stocks ISAs are to be merged and the limit for tax-free saving will be raised on July 1st from £11,520 to £15,000.
For more information on the Budget 2014 click here.