Budget Summary 2014 - page 2

Introduction
The combination of late Autumn Statements and early spring leaks
has left recent Budgets largely devoid of surprises. Most pundits
believed that the 2014 Budget would follow this trend, if only
because the Budget deficit in 2013/14 was still £108 billion.
However, George Osborne proved them wrong and revealed a
range of initiatives that had successfully been kept under wraps.
The reforms proposed to pensions, reducing the role of annuities,
will change retirement planning significantly and have already
had an impact on the value of insurance company shares. Some
aspects of the new pension framework remain unclear, in particular
the treatment of defined benefit (final salary) schemes.
The Chancellor also set out a new structure for ISA savers. Instead
of introducing a cap on total ISA investment, as was
rumoured last summer, Mr Osborne will increase
the annual contribution limit to £15,000 from
July 2014. In addition, he will effectively
scrap the current distinction between cash
ISAs and stocks and shares ISAs.
The changes to the size and rate of the
starting-rate income tax band from 2015/16
were also surprises for savers, although only
about 1.5 million people are expected to benefit.
Ironically, what was widely leaked as the good
news of the Budget (and its most costly) – a
further increase in the personal allowance to
£10,500 in 2015/16 – almost went unnoticed
among the Chancellor’s reforms.
BUDGET
19 MARCH 2014
page 2
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