Budget 2014: Winners and losers
George Osborne may not have had much money to play with, but this year's Budget was certainly more eventful than most, with a raft of measures aimed at boosting, among others, Britain's savers, investors and pensioners.
Here's our rundown of who benefited the most from the 2014 Budget – and who lost out.
Meet the ‘nicer' Isa. From 1 July 2014 savers will be able to invest a total of £15,000 in a single Isa with no cash or stocks and shares distinction. It means both savers and investors can put more aside each year, tax-free.
Where to begin? Pensions are set to become a whole lot more flexible and no longer will you have to buy an annuity with your hard earned pension fund, meaning you will no longer be forced to accept a poor level of annual income in retirement. If you do decide that's the way to go, you'll get free independent advice.
Almost two million families are set to benefit from new ‘tax-free' childcare, with savings worth up to £2,000 for each child under 12.
Over-65s will get access to higher savings rates with a new range of Pensioner Bonds offering rates of 2.8% over a year of 4% over three years. However, with limited funds available, we reckon you'll have to get in quick.
Beer duty is to be cut by 1p a pint and duty frozen on spirits and cider to support West Country cider producers, whiskey producers in Scotland and, of course, the British pub trade.
September's planned fuel duty hike has been scrapped. There will also be £200 million to repair potholes - one of UK motorists' biggest gripes.
Changing all those parking meters and ticket machines to accept the new £1 coin is likely to cost local authorities in the region of £50 million, reckons the British Parking Association.
The squeezed middle
A stingy 1% increase to the rate at which earners pay higher rate tax this year and next spells more misery for middle Britain. As pay rises start to exceed inflation, thousands more middle earners will be sucked into the higher rate tax bracket.
Rich, property-buying tax-avoiders
Yup, the mega-wealthy who buy residential property via company will now face Stamp Duty of 15% on purchases of £500,000 and above. Few will shed a tear.
Millions have been wiped off the value of some of the UK's biggest insurance companies, following George Osborne's announcement that it will no longer be essential for retirees to buy an annuity with their pension pot.
An easy target for policymakers – duty on cigarettes will rise at 2% above inflation until the end of the next parliament.
Bingo duty might have been halved to 10%, but duty on fixed odds betting terminals will be increased to 25%.
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
In exchange for any lump sum – usually your pension fund – an annuity is “bought” from an insurance company and provides an income for life. When you die, the income stops. Annuity rates fluctuate daily and depend on your sex (although from 21 December 2012 insurers will no longer be able to use gender as a factor when calculating annuities), age, health and a number of other factors, so you have to pick the right one and, once bought, its terms cannot be altered, so seek financial advice.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.