The focus of the Chancellors 2013 Budget was to assist businesses, employers and workers, as well as giving a firm warning to those in the business of tax avoidance.
As well as the highly anticipated announcement of a flat corporate tax rate of 20% from April 2015, legislation will shortly be published simplifying accounting for unincorporated small businesses.
The Chancellor extended the parameters for companies to qualify as eligible for the Seed Enterprise Investment Scheme (SEIS). A scheme giving tax relief for individuals who subscribe for these qualifying shares. The capital gains reinvestment relief has also been extended to 2013-14, meaning that individuals, who have made gains on the sale of assets, will be exempt from tax on these gains to the extent the proceeds are invested under SEIS.
A surprise announcement was the introduction of the employment allowance, although the rules surrounding this haven’t been announced it appears that from April 2014 an exemption of £2,000 will be given against employers National Insurance costs.
The budget saw changes to Benefits in Kind which will also affect employers. From April 2014, the amount that can be loaned to an employee, without incurring tax or National Insurance charges will increase to £10,000 from £5,000. New bands will be introduced to calculate the taxable value of company cars; from April 2015 lower percentages will be introduced for low C02 emission cars. The new maximum percentage chargeable will be increased to 37 from 35 from April 2015.
The introduction of the new employee shareholder status will come into affect from 1 September 2013, and will see individuals who are part of this scheme, to be able to be receive free shares to the value of £2,000 without incurring income tax and National Insurance; the company will also receive a corporation tax deduction. As well as this, on sale of shares acquired through this scheme, there will be a £50,000 exemption for capital gains tax.
Other announcements affecting individuals is the increase of the personal allowance from £9,440 for 2013/14, to £10,000 for 2014/15. The basic rate band limit has also been increased to £31,865 meaning higher rate tax will be payable at £41,865.
As announced in the 2012 Autumn Statement, the annual allowance for pensions will be reduced from £50,000 to £40,000 from April 2014. The lifetime allowance will be reduced from £1.5 million to £1.25 million.
It has been confirmed that the Nil Rate Band for Inheritance Tax (IHT) purposes will be set at £325,000 up to and including April 2017. From April 2013, the current cap of £55,000 for transfers to non UK domiciled spouses will be increased inline with the nil rate band. Non UK domiciled individuals with a UK domiciled spouse may also elect to be treated as UK domiciled for IHT purposes only, thereby being covered by the spousal exemption.
The Chancellor made a strong statement against those to promote tax avoidance schemes, and a number of evasion and avoidance measures and strategies are shown on the HMRC website.
With almost immediate effect the Chancellor announced a package of taxes chargeable on certain companies, partnerships and investment schemes (all categorised as non natural persons) who own UK property worth over £2 million.
From April 2012 property acquired by a non natural person with consideration of £2 million or over has been subject to Stamp Duty of 15%. From April 2013 the Chancellor announced an annual charge for such properties and a capital gains tax charge of 28%, when profit is made on the sale of UK property by a non UK resident non natural person.
Should you have any queries regarding the budget please do not hesitate to contact Claire Spinks on 01403 271919.