Budget 2014 – Income Tax Rates & Allowances
In the Budget, the Chancellor announced that from April 2015 the basic personal allowance for taxpayers born after 5 April 1948 will rise to £10,500. At the same time the basic rate limit will be reduced to £31,785. Taxpayers’ personal allowances are withdrawn for those with income of more than£100,000 at a rate of £1 for every £2 above £100,000. The rates and allowance for 2014-15 are unchanged from those announced in the Autumn Statement. According to the Government’s calculations the increases in the personal allowances will take 288,000 individuals out of the Income Tax system by April 2015.
The Government had previously announced plans to phase out the age-related personal allowances. Since 6 April 2013 these allowances have no longer been available to individuals born after 5 April 1948. From 6 April 2015 the new personal allowance of £10,500 will equal the limit for taxpayers born between 6 April 1938 and 5 April 1948. Only taxpayers born before 6 April 1938 will benefit from a higher allowance of £10,660.
From April 2015 a spouse or civil partner, who is not a taxpayer, or who does not pay tax above the basic rate, will be entitled to transfer up to £1,050 of their personal allowance to their spouse or civil partner. This will not advantage higher rate tax payers as the recipient of the transfer cannot be subject to tax at higher than the basic rate. This measure had been announced in the Autumn Statement but in the Budget the Chancellor announced that the limit was to be increased to £1,050 (from £1,000).