News: April 2014
Personal allowances are fixed for 2014/15 at £10,000, the level promised in the Coalition Agreement. However, the Budget announced that there will be a further (above inflation) increase to £10,500 for 2015/16, in line with the allowance currently available to taxpayers aged 65 to 74. Those aged 75 and over will continue to receive a personal allowance of £10,660. Note that if adjusted net income exceeds £100,000, the personal allowance is reduced by £1 for every £2 over £100,000. This gives an effective rate of 60% on income between £100,000 and £120,000 for 2014/15. Contact us for planning advice to avoid this 60% rate.
Income tax bands
The 20% basic rate band is £31,865 for 2014/15 and will be £31,785 for 2015/16. This means that you pay 40% tax if your taxable income exceeds £41,865 for 2014/15 and £42,285 for 2015/16.
The 45% top rate continues to apply to taxable income over £150,000 for 2014/15.
It had already been announced that the CGT annual exempt amount would increase to £11,000 for 2014/15 and £11,100 for 2015/16. With a top CGT rate of 28%, this allowance potentially saves just over £3,000 a year, or £6,000 for a married couple.
There has been no change in the inheritance tax nil rate band, which remains at £325,000 until 2018. Please contact us if you wish to discuss capital gains tax and inheritance tax planning, as we can help you take advantage of these valuable allowances.
The only significant change to inheritance tax is the proposed extension in the exemption that applies to the military who die on active service to those in the emergency services.