Finance Act 2014

Publication Date:January 01, 2014
 
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Finance Act 2014

2014 CHAPTER 26

An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.

[17th July 2014]

Most Gracious Sovereign

WE, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:-

1 Income tax, corporation tax and capital gains tax

PART 1

Income tax, corporation tax and capital gains tax

CHAPTER 1

Charge, rates etc

Income tax

Income tax

S-1 Charge, rates, basic rate limit and personal allowance for 2014-15

1 Charge, rates, basic rate limit and personal allowance for 2014-15

(1) Income tax is charged for the tax year 2014-15

(2) For that tax year-

(a) the basic rate is 20%

(b) the higher rate is 40%, and

(c) the additional rate is 45%

(3) For that tax year-

(a) the amount specified in section 10(5) of ITA 2007 (basic rate limit) is replaced with "£31,865", and

(b) the amount specified in section 35(1) of that Act (personal allowance for those born after 5 April 1948) is replaced with "£10,000"

(4) Accordingly for that tax year-

(a) section 21 of that Act (indexation of limits), so far as relating to the basic rate limit, does not apply, and

(b) section 57 of that Act (indexation of allowances), so far as relating to the amount specified in section 35(1) of that Act, does not apply

S-2 Basic rate limit for 2015-16 and personal allowances from 2015

2 Basic rate limit for 2015-16 and personal allowances from 2015

(1) For the tax year 2015-16-

(a) the amount specified in section 10(5) of ITA 2007 (basic rate limit) is replaced with "£31,785", and

(b) the amount specified in section 35(1) (personal allowance) is replaced with "£10,500".

(2) Accordingly, for that tax year-

(a) section 21 of that Act (indexation of limits), so far as relating to the basic rate limit, does not apply, and

(b) section 57 (indexation of allowances), so far as relating to the amount specified in section 35(1), does not apply.

(3) In section 34(1)(a) of that Act (introduction), omit ", 36".

(4) In section 35 of that Act (personal allowance for those born after 5 April 1948)-

(a) in subsection (1)(a), for "1948" substitute "1938", and

(b) in the heading, for " 1948 " substitute " 1938 ".

(5) Omit section 36 of that Act (personal allowance for those born after 5 April 1938 but before 6 April 1948).

(6) In section 45(4)(b) of that Act (marriages before 5 December 2005), omit "36(2) or".

(7) In section 46(4)(b) of that Act (marriages and civil partnerships on or after 5 December 2005), omit "36(2) or".

(8) In section 57 of that Act (indexation of allowances)-

(a) in subsection (1)(a), for "1948" substitute "1938", and

(b) in subsection (4) omit "36(2),".

(9) The amendments made by subsections (3) to (8) have effect for the tax year 2015-16 and subsequent tax years.

S-3 The starting rate for savings and the savings rate limit

3 The starting rate for savings and the savings rate limit

(1) In section 7 of ITA 2007 (the starting rate for savings) for "10%" substitute "0%".

(2) For the tax year 2015-16 the amount specified in section 12(3) of that Act (starting rate limit for savings) is replaced with "£5,000".

(3) Accordingly section 21 of that Act (indexation of limits), so far as relating to the starting rate limit for savings, does not apply for that tax year.

(4) In section 852 of that Act (power to make regulations disapplying duty to deduct sums representing income tax), in subsection (2)(a), after "made" insert "or is unlikely to be liable to pay any income tax on that person's savings income for that tax year".

(5) The amendments made by subsections (1) and (4) have effect for the tax year 2015-16 and subsequent tax years.

S-4 Indexation of limits and allowances under ITA 2007

4 Indexation of limits and allowances under ITA 2007

(1) ITA 2007 is amended as follows.

(2) In section 21 (indexation of the basic rate limit and starting rate limit for savings)-

(a) in each of subsections (1), (3) and (3A), for "retail prices index" substitute "consumer prices index", and

(b) after subsection (5) insert-

"(6) In this section "consumer prices index" means the all items consumer prices index published by the Statistics Board."

(3) In section 57 (indexation of allowances)-

(a) in each of subsections (2), (3) and (4), for "retail prices index" substitute "consumer prices index", and

(b) after subsection (6) insert-

"(7) In this section "consumer prices index" means the all items consumer prices index published by the Statistics Board."

(4) The amendments made by subsections (2) and (3) have effect for the tax year 2015-16 and subsequent tax years.

Corporation tax

Corporation tax

S-5 Charge for financial year 2015

5 Charge for financial year 2015

Corporation tax is charged for the financial year 2015.

S-6 Small profits rate and fractions for financial year 2014

6 Small profits rate and fractions for financial year 2014

(1) For the financial year 2014 the small profits rate is-

(a) 20% on profits of companies other than ring fence profits, and

(b) 19% on ring fence profits of companies.

(2) For the purposes of Part 3 of CTA 2010, for that year-

(a) the standard fraction is 1/400th, and

(b) the ring fence fraction is 11/400ths.

(3) In subsection (1) "ring fence profits" has the same meaning as in Part 8 of that Act (see section 276 of that Act).

S-7 Rates for ring fence profits and abolition of small profits rate for non-ring fence profits

7 Rates for ring fence profits and abolition of small profits rate for non-ring fence profits

Schedule 1-

(a) sets the corporation tax rates for ring fence profits for the financial year 2015 and future years, and

(b) contains provision about the abolition of the small profits rate for profits other than ring fence profits.

Capital gains tax

Capital gains tax

S-8 Annual exempt amount for 2014-15

8 Annual exempt amount for 2014-15

(1) For the tax year 2014-15 the amount specified in section 3(2) of TCGA 1992 (annual exempt amount) is replaced with "£11,000".

(2) Accordingly section 3(3) of that Act (indexation of annual exempt amount) does not apply for that tax year.

S-9 Annual exempt amount for 2015-16 onwards

9 Annual exempt amount for 2015-16 onwards

(1) For the tax year 2015-16 and subsequent tax years the amount specified in section 3(2) of TCGA 1992 (annual exempt amount) is replaced with "£11,100".

(2) Section 3(3) of that Act (indexation of annual exempt amount) does not apply in relation to the tax year 2015-16 (but subsection (1) does not override section 3(3) of that Act for subsequent tax years).

Capital allowances

Capital allowances

S-10 Temporary increase in annual investment allowance

10 Temporary increase in annual investment allowance

(1) In relation to expenditure incurred during the period beginning with the start date and ending with 31 December 2015, section 51A of CAA 2001 (entitlement to annual investment allowance) has effect as if in subsection (5) the amount specified as the maximum allowance (which in the absence of this section would be £250,000 in relation to expenditure incurred before 1 January 2015 and £25,000 in relation to expenditure incurred on or after th at date) were £500,000.

(2) Schedule 2 contains-

(a) provision about chargeable periods which straddle the start date or 1 January 2016, and

(b) amendments of FA 2013.

(3) In this section and that Schedule "the start date" means-

(a) for corporation tax purposes, 1 April 2014, and

(b) for income tax purposes, 6 April 2014.

CHAPTER 2

Income tax: general

Exemptions and reliefs

Exemptions and reliefs

S-11 Tax relief for married couples and civil partners

11 Tax relief for married couples and civil partners

(1) ITA 2007 is amended as set out in subsections (2) to (8)

(2) After section 55 insert-

"CHAPTER 3A

Transferable tax allowance for married couples and civil partners

Introduction

55A Tax reduction under Chapter

(1) This Chapter contains provisions about the entitlement of a spouse or civil partner to a tax reduction in a case where the other party to the marriage or civil partnership has elected for a reduced personal allowance

(2) A tax reduction under this Chapter is given effect at Step 6 of the calculation in section 23.

(3) For the effect of section 809B (claim for remittance basis to apply) applying to an individual for a tax year, see section 809G (no entitlement to tax reduction).

Tax reduction

55B Tax reduction: entitlement

(1) An individual is entitled to a tax reduction for a tax year of the appropriate percentage of the transferable amount if the conditions in subsection (2) are met.

(2) The conditions are that-

(a) the individual is married to, or in a civil partnership with, a person who makes an election under section 55C for the purposes of this section which is in force for the tax year ("the individual's spouse or civil partner"),

(b) the individual is not, for the tax year, liable to tax at a rate other than the basic rate, the dividend ordinary rate or the starting rate for savings,

(c) the individual meets the requirements of section 56 (residence) for the tax year, and

(d) neither the individual nor the individual's spouse or civil partner makes a claim for the tax year under section 45 (married couple's...

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