With the 2014 Budget just a day away, the speculation surrounding what the Chancellor will announce has reached melting point.
There are plenty of changes that we already know will be confirmed in Chancellor George Osborne’s speech at the House of Commons on March 19.
Here is an overview of what will definitely be introduced at the start of the new tax year.
Go further: Budget 2014 with Which? – get the latest news and advice in our Budget hub
The personal income tax allowance will rise to £10,000 in the 2014/15 tax year and will then increase by the Consumer Price Index (CPI) rate of inflation each year thereafter.
Savers will be able to hold an extra £600 tax-free in 2014/15, when the Isa allowance increases to £11,880. This means that £5,940 will be able to be placed in a cash Isa.
The annual limits on Junior Isas will also rise to £3,840 per child.
Go further: Best Rate cash Isas – find out which Isas are currently providing the best returns
Drop in tax relief on pensions
Retirees will be pleased to hear that the state pension is set to increase by £2.95 a week in April, to £113.10
However, those saving for retirement could be dismayed by a fall in the maximum annual amount that can be saved into a pension and still attract tax relief.
The annual allowance will drop from £50,000 to £40,000, while the total amount you’re able to save into a pension tax-free will drop from £1.5million to £1.25 million.
Go further: Tax relief on pensions – learn more about how this works in our expert guide
Council tax break on ‘granny flats’
Another boost for the elderly population comes in the form of a council tax break for properties with annexes built for live-in family members.
These ‘granny flats’ are currently classed as separate buildings by local authorities, meaning property owners are effectively paying two council tax bills.
However, they are expected to save roughly £500 a year thanks to a 50% discount on annexes being introduced in 2014/15.
Owners of second homes could face larger tax bills though, thanks to a significant reduction in principal private residence relief.
This tax relief currently provides second-home owners with a capital gains tax exemption for their last three years of ownership, provided they had used the property as a main residence at some point. From April, this will only apply to the last 18 months of ownership.
Go further: Reducing your council tax bill – our guide explains who is eligible for council tax breaks
Decrease in business rates
Mr Osborne has declared that the Treasury is ‘hungry for ideas’ for how they can help small businesses in this year’s Budget.
He has already confirmed that inflationary increases in business rates will be capped at 2% from next April and that businesses will also receive a £2,000 cut to their National Insurance Contributions bill.
The Chancellor says he is still ‘very much in listening mode’ though and has encouraged business owners to submit their own ideas for what should be addressed in this year’s budget before February 14.
Help to Buy extended
The government’s Help to Buy scheme was of the main talking points of last year’s Budget.
The first part of this scheme, in which the government provides equity loans for new-build properties, will be extended until 2020. Plans for the construction of a new garden city in Ebbsfleet will also be confirmed.
The Chancellor will also explain new additions to the midata programme that will force banks to present current account data in a universal format.
- Budget 2014 with Which? – get the latest news and advice in our Budget hub
- 2013 Budget highlights – an overview of last year’s key announcements
- State pension speculation – is George Osborne preparing to announce more changes?