12 Mar Budget 2013 – How will it affect you and your business?
Budget 2013 Report
Chancellor George Osborne announced his budget on Wednesday 20th March which contained several changes to the UK tax system. Essentially this budget was fiscally neutral meaning that all tax cuts announced were paid for by tax rises elsewhere.
Personal Income Tax
The basic personal allowance will rise to £9,440 from the 6th April 2013 with a further rise to £10,000 from the 6th April 2014.
The personal allowance limited for persons aged over 65 remains unchanged at £10,500.
The rate at which an individual starts to pay tax at the higher rate of 40% is on all earnings over £41,450 from the 6th April 2013 which is a decrease from the 2012/13 year where it was £42,275.
Dividend tax rates remain unchanged at 10% for the basic rate and 32.5% for the higher rate.
Corporation Tax for Limited Companies
For companies with profits below £300,00 the rate of corporation tax remains unchanged at 20%
Capital Gains Tax
Rates remain unchanged at 18% for the standard rate and 28% for the higher rate.
VAT
Remains unchanged at 20%, although the compulsory registration threshold has increased to £79,000.
National Insurance Contributions
Class 1 (employee) contributions remain the same at 12% but now for all earnings over £149.00 per week (rising from £146.00).
Class 1 (employer) contributions remain the same at 13.8% but now for all earnings in excess of £148.00 per week (rising from £144.00).
Class 2 (self-employed) contributions will rise to £2.70 per week (from £2.65) with the earnings threshold exemption rising to £5,725 of taxable profits.
Class 4 (self-employed) contributions remain the same at 9% for all profits between £7,755 and £41,450, after which, the rate falls to 2%.
Exemption Threshold for Employment-related Loans
The current limit with which you must declare an employment related loan (such as a Director’s Loan) on your self-assessment tax return is £5,000. From the 6th April 2014, this limit will increase to £10,000.
Tax-free Childcare Scheme
A tax-free childcare scheme is to be introduced in the autumn of 2015 which will equate to 20% toward the first £6,000 paid out in childcare for each child. All families who are working and not receiving tax credits or universal credit will qualify as long as neither parent earns more than £150,000 a year.
Employment Allowance
From April 2014, all businesses and charities will be eligible for an employment allowance of £2,000 per year against employer Class 1 Employer National Insurance Contributions. It is expected that this allowance will be administered through the normal payroll process.
Capital Allowances
Legislation introduced by the Finance Act 2013 will increase the Annual Investment Allowance (AIA) from the current £25,000 to £250,000 per year for a two year period only on all qualifying expenditure commencing from 1st January 2013
Miscellaneous
Fuel Duty has been frozen for 2 years with the expected increase deferred to September also scrapped.
The beer duty escalator introduced by the last government has been scrapped and a penny has been cut from the current level of beer duty.
If you have any concerns about any aspects of the budget and how it could affect you or your business, please don’t heistate to email your query to us using the ‘contact us’ page.