With the Budget on the 19th March only days away, speculation is rife that George Osborne is under pressure to pre-empt possible interest rate increases next year by offering tax cuts, says Jill Evenden, MD of Nottingham firm EBS Accountants.
“Polling day for the 2015 general election is the 7th May,” she says, “so an announcement to increase the basic personal allowance, currently £10,000, may be an option as this would feed into taxpayers’ pockets before polling day.
“MPs are keenly aware that any increase in mortgage interest rates, prior to the next election, would have unfortunate associations with the coalition, even though the Bank of England is responsible for setting rates.
“Many of the other tax changes for the 2014-15 year are disclosed in draft legislation released by HMRC last month, including updates on Business Tax and Capital Gains Tax,” says Jill.
These are:
Capital Gains Tax:
• The annual exempt amount is to be increased to £11,000.
• The rule that exempts the final 36 months of ownership of a private residence from CGT is to be reduced to 18 months. The 36 months will still apply if the owner is disabled or moved into a care home.
Business Tax:
• HMRC is introducing new legislation affecting Limited Liability Partnerships. Members of LLPs who satisfy the new criteria as “salaried members” will effectively lose their self employed status and be taxed under the PAYE legislation. There will also be restrictions on the way in which mixed partnerships, those with individual and typically corporate members, allocate profits and losses.
George Osborne has also announced that from 5th April 2015, married couples and civil partners will have a limited ability to transfer personal allowances.
“Whilst it is unlikely we will see a return to direct tax relief for mortgage interest payments, that is the historical mortgage interest relief at source (MIRAS), Mr Osborne may be tempted to offer something to his back-bench MPs to placate their concerns,” she says.
Jill adds that now is also the ideal time to look at all Personal Tax planning: ”Individuals can make the most of the ISA allowance by investing up to £11,520, and all available tax relief on personal pensions should be utilised by making any additional payments before the end of the current tax year.”
