The key announcements in the 2013 Budget are as follows:
From 6 April 2014, the personal allowance for those born after 5 April 1948 will be increased by £560 from £9,440 to £10,000. Starting from 2015/16 the personal allowance will increase in line with inflation each year based on the Consumer Prices Index.
The basic rate limit threshold will be reduced to £31,865 for 2014/15 from £32,010. The personal allowance and basic rate limit will be £41,865, a 1% increase on 2013/14. This limit will further increase by 1% for 2015/16 to £42,285.
For people born on or before 5 April 1948 there is no increase in the personal allowance, currently £10,500 with a higher allowance of £10,660 for those born before 6 April 1938.
For 2014-15 the main rates of income tax will remain at the 2013/14 rates - 20% basic rate, 40% higher rate and 45% additional rate.
New childcare scheme
A new scheme will be phased in from autumn 2015 initially for children under 5 but to be extended over time to include children under 12 to support families with both parents working and single working parents where support is not received through the childcare element of working tax credits/universal credit. The scheme will not be available to families where one parent has an income over £150,000. For childcare costs of up to £6,000 per year per child support of 20% will be available. Consultation will take place on the detail.
Exemption threshold for employer provided beneficial loans
For 2014/15 and subsequent years the current threshold of £5,000 will increase to £10,000 for employment-related taxable cheap loans. As long as the balances on all such loans do not exceed the threshold in a tax year the employer will not need to report the loan to HMRC and there will be no tax charge on the employee.
Company Car Tax rates 2015/16 and onwards
Legislation will be introduced in the Finance Bill 2013 to introduce two new appropriate percentage bands for company cars emitting 0-50g of carbon dioxide per kilometre (with appropriate percentage set at 5%) and 51-75g of carbon dioxide per kilometre (with appropriate percentage set at 9%). For 2015/16 as set out in the 2012 budget there will be an increase in the appropriate percentage for company cars emitting more than 75g of carbon dioxide per kilometre of two percentage points to a maximum of 37 per cent. The 2013 budget also sets out a commitment to the percentage point differential for the first three bands through to 2019/20.
Van Fuel Benefit Charge 2014/15
The van fuel benefit charge will increase by inflation in 2014-15 based on the increase in the September 2013 Retail Price Index (RPI).
Company Car and Van Fuel Benefit Charge 2014/15
The rate of fuel benefit charge for company cars and fuel benefit charge for company vans will also increase in line with inflation (based on RPI) for 2014-15. The increase will be based on the September 2013 RPIfigure.
Pensions tax relief
Legislation will be introduced in the Finance Bill 2013 to reduce the annual allowance to £40,000 and to reduce the standard lifetime allowance (LTA) to £1.25m from 2014/15 onwards as announced in the Autumn Statement 2012. Where there is a reduction in the LTA an individual protection regime will be consulted on to include in the Finance Bill 2014 to add to the fixed protection regime already available.
Capital Gains Tax Annual Exempt Amount
The annual exempt amount for capital gains tax increases from £10,600 to £10,900 for 2013-14.
Seed Enterprise Investment Scheme – Capital Gains Reinvestment Relief
Legislation will be introduced in Finance Bill 2013 to extend the capital gains tax (CGT) relief for reinvesting gains in SEIS shares to gains accruing in 2013-14 when those gains are reinvested during 2013-14 or 2014-15. The relief will apply to half the qualifying re-invested amount.
Inheritance tax allowance
There have been no changes to the inheritance tax of £325,000. The intention was to freeze this at this level until April 2015 but this has now been extended to April 2018.
Inheritance tax - Limiting the deduction for liabilities on death
Legislation will be introduced in Finance Bill 2013 to amend the inheritance tax provisions which allow a deduction from the value of an estate for liabilities owed by the deceased on death. The changes are being introduced in response to avoidance schemes and arrangements which exploit the current rules that allow a deduction regardless of whether or not the liabilities are paid after death, or how the borrowed funds have been used.
Inheritance tax – spouses and civil partners domiciled overseas
Legislation will be introduced in Finance Bill 2013 to increase the lifetime cap of £55,000 on transfers to non-uk domiciled spouses or civil partners to the nil rate band of £325,000 with effect from 6 April 2013.
Also a new election regime will be introduced for individuals domiciled other than in the UK and who are married or in a civil partnership with a UK domiciled person, who will be able to elect to be treated as UK-domiciled for IHT purposes.
The Finance Bill 2013 will introduce legislation to reduce the main rate of corporation tax for non-ring fenced profits for the financial year commencing 1 April 2014 to 21% (as mentioned in the 2012 Autumn Statement) and also to reduce the rate for the financial year commencing 1 April 2015 to 20% to unify with the small companies rate which remains unchanged at 20%. The main rate applies to profits in excess of £1.5m and the small profits rate to profits below £300,000. A marginal rate will be effective between these limits.
National insurance £2,000 employment allowance
For 2014/15 an allowance of £2,000 per year for all businesses and charities to be offset against their employer Class 1 secondary NICs liability will be introduced. The allowance will be claimed as part of the normal payroll process through RTI. Legislation will be introduced later in the year.
Tax simplification for small businesses
The Finance Bill 2013 will introduce legislation following the consultation and review of small business taxation, to introducing a voluntary cash basis for unincorporated businesses up to the VAT registration threshold with effect from 2013/14.
Class 2 National Insurance process simplification for the self-employed
The Government will consult on options to simplify the administrative process for the Class 2 National Insurance by using Self Assessment to collect Class 2 NICs alongside income tax and Class 4 NICs.
Capital allowances on low emission vehicles
Legislation will be introduced in Finance Bill 2015 to extend the 100 per cent allowance (FYA) for expenditure incurred on cars with low carbon dioxide emissions and electrically propelled cars for an additional three years to31 March 2018.
Registration and deregistration limits
From 1 April 2013, the taxable turnover threshold which determines whether a person/entity must be registered for VAT will increase to £79,000 (currently £77,000).
The de-registration threshold will increase to £77,000 (currently £75,000).
The registration and deregistration threshold for relevant acquisitions from other EU Member States will also be increased to £79,000 (currently £77,000).
Fuel Scale charges
Fuel scale charges will be revised effective from 1 May 2013. These will be published on our news feed.
Changes to the place of supply rules
Legislation will be introduced in Finance Bill 2014 to tax intra-EU business to consumer supplies of telecommunications, broadcasting and e-services in the Member State in which the consumer is located. These services are currently taxed in the Member State in which the business is established. The changes will take effect from1 January 2015and implement already agreed EU legislation into UK legislation, ensuring that these services are taxed fairly in the Member State of consumption.
To save the need for businesses affected by these changes to register for VAT in other Member States, a Mini One Stop Shop will also be introduced from1 January 2015. This is an IT system that will give businesses the option of registering in just the UKand accounting for VAT due in other Member States using a single return.
From 6pm on Wednesday 20 March 2013 the following changes will take effect:
Tobacco duty – 2% above the rate of inflation
The following increases are effective from 25 March 2013:
Alcohol duty – 2% above inflation for spirits, wine and made-wine, cider and perry. The duty rates on beer will decrease by 6% for low strength beer and 2% for the standard rate of beer duty.
A document containing the tax rates applying for 2013-14 will be available for download from our website downloads page in due course.
Printed tax tables are also being produced and if you would like to receive a copy then please contact us.
Please contact us at Edwin Smith if you would like to discuss any of the measures announced in the 2013 Budget in more detail or to apply any changes to your specific circumstances.
This article is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this web page.