2014 Budget Summary

2014 Budget Summary There were a number of potentially significant amendments and proposed changes in today's Budget. We summarise some of the key issues as they effect our members below. Personal allowances for non-residents HMRC are to consult on when non-residents will be able to claim the UK personal allowance. The UK personal allowance is £10,000 for 2014/2015 and can therefore represent a significant tax benefit. Currently EEA nationals (amongst others) can claim the personal allowance - even if not UK resident. They are to consult on whether the personal allowance could be restricted to UK residents and those living overseas who have "strong economic connections" in the UK. CGT for non-residents They have reiterated their intention (as announced in the 2013 Autumn Statement) to introduce provisions from April 2015 to charge CGT on gains made by non-residents disposing of UK residential property. There are no details yet and will be consulting on the proposals during 2014. They do however mention that it will apply to "charge CGT on future gains made by non-residents" which would indicate there will be a provision for rebasing existing property as at April 2015. Annual Investment Allowance ("AIA") The limit for the the AIA will be increased to £500,000 from April 2014 to 31 December 2015, after which it will return to £25,000.

Enveloped property They are significantly reducing the £2Million limit that applies for the ATED (and related) provisions to kick in. These apply to UK residential property that is held (broadly speaking) in a company. In particular these provisions provide for:

stamp duty land tax (SDLT) at 15 per cent on acquisition of a residential property;

an annual tax on enveloped dwellings (ATED); and

capital gains tax (CGT) at 28 per cent on any gain on disposal. They are to reduce the £2Million limit to £500,000. You can see more on this in this Gold members article: Budget 2014: Changes To Enveloped Property IHT liabilities & excluded property Measures were introduced from 2013 that prevented non UK domiciliaries borrowing funds against UK property (to reduce its value for IHT purposes) and then transferring the cash released to an overseas bank account (which would be exempt from IHT for a non UK domiciliary). Unfortunately there was a loophole in that a deduction for the debt was still allowed where the borrowed funds were deposited in a foreign currency account in a UK bank, which is disregarded for IHT purposes. This Budget measure closed this loophole. Personal allowance For 2015/2016 the personal allowance for most people will increase to £10,500 and the basic rate limit will be £31,785. ISA's With effect from 1 July 2014 the annual subscription limit for cash and stocks and shares ISA will be equalised at £15,000. There will also be no restrictions on the transfer of funds between stocks and shares and cash ISAs.  Transferable allowance between spouses As stated in the 2013 Autumn Statement they will allow a spouse or civil partner who is not liable to income tax above the basic rate to transfer up to £1,050 of their personal allowance to their spouse/civil partner, provided that the recipient of the transfer is not liable to income tax above the basic rate. This will apply from 6 April 2015.