A brief summary of the highlights of the 2013 Budget announced by George Osborne.
Growth forecast for this year cut to 0.6 per cent from 1.2 per cent in December and next year is now expected to grow by 1.8 per cent rather than 2 per cent
Office for Budget Responsibility predicts UK will avoid a triple-dip recession
Next month the personal allowance will increase by £1,335 to £9,440. It will increase to £10,000 for 2014/15. The basic rate ceiling is reducing again this year by £2,360 to £32,010 and next year by £145 to £31,865. The £150,000 ceiling for the top rate of tax is unchanged, but the rate from next month will be 45% rather than 50%.
The first £2,000 of shares gifted to employees under the new employee share scheme will be exempt from income tax and national insurance. This will be achieved by deeming the employee paid £2,000 for them. Any gains on up to £50,000 of employee shares will be free from capital gains tax.
HMRC has published a table which shows everyone with income between £7,500 and £100,000 will pay less tax and national insurance in the coming financial year than they have this year. This assumes their income is exactly the same in both years and takes no account of inflation. The tax saving for those in the £30,000 to £50,000 bracket will be just over £200 a year.
From 26th March 2013 the maximum capped pension drawdown will increase from 100% to 120% of an equivalent annuity.
The Single flat-rate pension of £144 a week is to be brought forward a year, to 2016.
As announced last year, the main rate of corporation tax will be 23%, with the small companies rate unchanged at 20%. The main rate will reduce to 21% next year, and from April 2015 all companies will simply pay a flat rate of 20%.
Employers will pay less national insurance from April 2014. The first £2,000 of national insurance which would otherwise have been payable will be offset by an “employment allowance”. The intention is that this will particularly encourage small businesses considering taking on their first employees, as they will probably not face a national insurance bill at all as a result of this measure.
The 100% first year allowance on low emission cars has now been extended to 31st March 2018, rather than 2015 as originally intended. Leased cars will, however, no longer qualify for the allowance. These changes, plus changes to the fuel benefit charge and to the emissions thresholds make it essential any businesses with company cars review their policy and make sure it still makes tax sense.
From April 2014 employers will be able to grant employees a beneficial loan of up to £10,000 without this being treated as a taxable benefit. The current limit is £5,000.
It has been announced that there is a planned capital gains tax relief on the disposal of controlling shareholdings where these are sold into an employee ownership structure. This could be very good news for business owners wishing to retire, depending on the very important details of the measure when it is introduced. The intention is to introduce this in the 2014 Finance Bill.
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