The personal allowance is set to rise by £1,335 to £9,440 from this April, and in Wednesday's Budget the chancellor announced that in April 2014 it will rise to £10,000 - fulfilling a key manifesto pledge of the Liberal Democrats one year earlier than originally planned. Thereafter, it will increase in line with the Consumer Price Index inflation (CPI) in future years, starting from 2015-16. But at the other end of the scale, the threshold for the 40 per cent bracket is set to fall next month, pulling more middle income earners into the higher bracket.
Capital gains tax relief (CGT) on Seed Enterprise Investment Schemes (SEIS) is to be extended. If you reinvest gains made in 2013-14 in a SEIS in that year, you will gain 50 per cent CGT relief. It was also announced in the Budget you will have that relief if you reinvest 2013-14 gains in tax year 2014-15.
Meanwhile, stamp duty on unit trusts and open-ended investment companies (Oeics) will be scrapped, which may or may not be passed onto investors via lower fund charges.
However, the ability of venture capital trusts (VCTs) to carry out enhanced buy-backs is in question: the government said in the Budget that it is concerned that offering enhanced buy-backs is not operating within the spirit of the legislation and will continue to monitor particular aspects of various venture capital schemes to ensure that they remain well-focused and supportive of the needs of businesses. An enhanced buy-back occurs when a VCT manager buys back your VCT shares and you invest in new shares from the same VCT with a further 30 per cent income tax relief. It comes as the government starts a wider consultation on new proposals to target the promoters of tax avoidance schemes.
Employees are also set to benefit: the size of a loan an employer can make to employees tax-free for benefits such as season tickets is set to rise from £5,000 to £10,000.
From the 1 September, companies will be able to offer employees a new status whereby they sacrifice certain rights in return for shares in the company worth a minimum of £2,000. It was announced in the Budget that the first £2,000 of these shares will be free from income tax and national insurance.
