On the 19th March, the Chancellor, George Osbourne gave his fifth Budget statement. We look at some of the main impacts of the Budget on Credit Unions.
Most Credit Union’s pay corporation tax at the small profits rate (currently applies to taxable profits up to £300,000) which will remain unchanged at 20 per cent. For Credit Unions with taxable profits over £300,000, as previously announced, the main rate of corporation tax will be reduced to 21 per cent from April 2014 and further reduced to 20 per cent from April 2015.
PAYE & NI on Employee Wages
The Chancellor made some small changes to the various tax bands for personal tax which will affect the level of tax employees pay on their wages. The income tax personal allowance will increase from £9,440 to £10,000 in 2014/15, and further increase to £10,500 in 2015/16. The higher allowances for those born before 6 April 1948 will not be increased. The basic rate limit will reduce from £32,010 to £31,865 in 2014/15 and further reduce to £31,785 in 2015/16. However, the higher rate threshold will increase from £41,450 to £41,865 in 2014/15 and further increase to £42,285 in 2015/16. There were also changes to the rules regarding drawing down your pension which can be found on our main website.
For Credit Unions offering members ISAs or Child Trust Funds there were some important changes to the rules. From 1st July, people will be able to deposit up to £15,000 in New Individual Savings Accounts (NISAs- Not to be confused with the convenience stores). The savings can be held as either cash or shares. Funds can be transferred from previous ISAs into NISAs. The amount that can be invested in a Junior ISA or CTF in 2014/15 will increase to £4,000. Credit Unions offering ISAs who are suffering from an excess of shares will need to consider the implications.
Peoples saving habits may be impacted by the changes made to tax on savings. From 6 April 2015, the savings rate will be reduced from 10 per cent to 0 per cent and this rate will be available on up to £5,000 of savings income. Non-savings income is always taxed before savings income. For 2015/16, if an individual has total income of less than £15,500, he or she will be able to register to receive tax-free savings, from their bank or building society. In addition, the Chancellor announced a new Pensioners Bond which will launch in 2015 and offer over 65s an interest rate of up to 4%.
For more details on all the Budget announcements please see Alexander Sloan’s Budget Report on our main website.