What will the Budget 2014 hold?

By Sarah Beresford, 18/03/2014

The Budget. It’s just about one of the most important days of the year and for many of us, I know myself included in this, I never know what to expect or even what to look out for!  That’s why it’s great to be working with a team of independent financial advisers at Searchlight Investments, who do know a thing or two about finances, investments and money.

The Budget statement will be delivered at lunchtime (12.30) tomorrow – so a good time to stop, take a break and listen to how your money is planned to be spent by the Government in the forthcoming year.

George Osborne, will give his speech to the House of Commons, outlining financial plans. Typically areas of focus are on future spending in Education, the National Health Service, Police, housing, housing benefits, and general public services.

However, as we all know, we tend to focus on what matters to us. What will make us feel better off, or worse off?  From buying food,  filling up the car, smoking and drinking, to the personal tax threshold, pension reforms and changes to national insurance, the budget has a long-term impact!

So what are we expecting from the budget, can we second-guess what Osborne will say? Well judging by the number of opinion pieces making it into mainstream tabloids about the budget, I’d say there’s a lot of guessing going on.

But at least Osborne does have one piece of good news to shout about, as he is most likely to upgrade his forecasts for economic growth.  As Moneyweek.com mentioned in their feature, George Osborne will almost certainly upgrade his forecasts for economic growth from the predicted 2.4% 2014/15 mentioned in November last year, to a new forecast that could be as high as 3%.

According to Which? George Osborne faces increasing pressure to cut the number of people who pay 40% income tax. Apparently, the number of people paying 40% tax now equates to 4.4million and is expected to rise to 6 million in 2015-2016.

When I asked Richard Pipe, Director at Searchlight, what he thought the UK budget would hold, he also remarked on the 40% tax bracket, saying:

“For individuals, in recent years, more and more people fall into the 40% tax bracket, not necessarily because of rising income but because of falling tax thresholds (which have not kept pace with earnings and inflation).  When the 40% tax bracket was first introduced, only 6% of individuals paid tax at that rate, now it is more than 3x that.”

He continues “I would like to see a programme put in place to start raising the 40% threshold from its current level, to at least keep it in line with changes in National Average Earnings.  I believe that individuals should be able to retain more of their income and choose how to spend it.”

In short, other changes forecast are:

  • There are indications that there’ll be a pledged increase in the personal tax allowance of £10,000 to £10500 2015-16.
  • There may be some pension reforms, whereby customers are allowed to withdraw their money, rather than be paid regular amounts on plans with small amounts of cash in them.
  • There could be a childcare tax break, according to the Evening Standard. The new scheme – due to come into force from the autumn of 2015 – will be worth up to £2,000 per child, compared with the £1,200 originally proposed.
  • Finally, the BBC foresee a carbon tax cut meaning lower fuel bills. It is being widely predicted that George Osborne may decide to abandon any further increases in the Carbon Price Floor, introduced in April 2013. The BBC say, that any freeze in the tax could cut as much as £50 from consumer bills by 2020.

Watch this space and I’ll update you tomorrow with our take on the Budget!

 

 

 

 

 

 

 

 

 

 

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