Radical Changes in Budget

The Chancellor George Osborne has unveiled measures to boost the income of pensioners and savers in his 2014 Budget, announced yesterday. People will no longer have to use their pension pot to buy annuities. A retiree can now draw their entire pension in one go, if they wish. The changes will affect those over 55 who have savings in a defined contribution pension scheme, such as a personal pension. However, as soon as pension payments are made, they become taxable.

Nicer Isa

In other measures unveiled, the amount people can save tax-free in Isas is to rise, while pensioners will also get a higher interest savings option in the form of a Pensioners’ Bond. Cash and share Isas are to be merged into a single new Isa with an annual tax-free savings limit of £15,000 from 1 July. The limit for Junior Isas will be raised to £4,000.

Increased HMRC powers

Not so popular, arguably, is new powers granted to HMRC that will allow it to seize money owed directly from bank accounts for the first time. “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,” George Osborne said.

The Budget also outlined a plan to require firms and individuals in dispute with the tax office over their use of tax avoidance schemes to pay money owed in advance and later challenge this in the courts. The move is expected to speed up the flow of money owed to the Exchequer in the estimated 65,000 legacy UK tax avoidance cases.

Stamp duty net widened

The Chancellor has also widened the stamp duty net to pull more foreign buyers of UK properties through company structures into the tax system. The Government had already imposed the 15% stamp duty on all properties bought through a corporate envelope above £2m, but it has now fallen to just £500,000. Homes rented out are exempt from the measure in a bid to reduce the number of empty properties in the capital. For any advice relating to residential property, contact a property lawyer.

Married couple tax break

More than 4m married couples will benefit from tax breaks after the Chancellor raised the transferable allowance. The allowance that married couples can transfer from one spouse to another will rise from £1,000 to £1,050. The tax break will now be linked to any increases in the personal allowance, which will rise to £10,500 next year.

Help to Buy scheme extended

The Chancellor also confirmed that the Help to Buy Scheme for people wishing to purchase newly-built homes will be extended to 2020. Under the equity loan scheme, buyers can put down a deposit of just 5% on a new home, and take out a mortgage of up to 75% of its value. The difference is made up with an equity loan of up to 20% from the government. The second part of Help to Buy – the UK-wide mortgage guarantee scheme – is still due to finish at the end of December 2016.

Our New Homes division acts for developers in the sale of schemes of all sizes. To find out more about how we can help with negotiating section 106 agreements and infrastructure agreements, site set ups, the sale of affordable housing and the acquisition and sale of part-exchange properties, email us at newhomes@ibblaw.co.uk.

Finally, if you would like to read the whole budget speech at your leisure, you can adjourn to your local public house where beer will be 1p a pint cheaper, courtesy of Mr Osborne.

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