1 / 43

Budget 2013

Budget 2013. 21 March 2013. Budget Breakfast …our schedule. Apologies About Reeves Budget overview Business tax changes Intermission Personal Tax Changes What the papers say Coffee. Business Tax. Jennifer Williamson ACA. Business Services Partner. Business Tax Companies.

jeanette-lara
Download Presentation

Budget 2013

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Budget 2013 21 March 2013

  2. Budget Breakfast …our schedule • Apologies • About Reeves • Budget overview • Business tax changes • Intermission • Personal Tax Changes • What the papers say • Coffee

  3. Business Tax Jennifer Williamson ACA Business Services Partner

  4. Business Tax Companies

  5. Mr Pitt’s company has taxable profits of £500,000 in the years ended 31 March 2013 and 2014. The corporation tax payable by the company is: Corporation Tax… an example

  6. Mrs Selfridge’s business made profits of £50,000 in 2012/13. Sole trader tax bill: £13,500 Limited company tax bill: £8,500 £5,000 saving N.B. there’s a non corporate strategy as well Business Structure… To incorporate or not?

  7. Director Shareholder comparison Strictly Dancing Ltd has £100,000 of pre-tax profits to transfer to director shareholder Mr Forsyth. • Company pays tax at 20% • Forsyth is 40% taxpayer • Class 1 NIC ceiling reached

  8. Major changes to capital allowances from January 2013 Timing is everything • 100% relief for “environmentally beneficial” plant & machinery remains • Applies to all businesses

  9. Is your car Green? Tax relief based on CO2 emissions Thresholds • From April 2015 100% relief abolished Leased Cars

  10. Audi vs Lexus

  11. Company car benefits • Employers who provide company cars • Taxable benefit based on list price, fuel type and C02 emissions • From April 2014 - taxable % will increase by 1% • - Up to a maximum of 35% (37% by 2015/16) • From 2015 – new rate for vehicles with Co2 emissions below 75g/km • From April 2016 – 3% supplement on diesel cars removed • Benefit relief on green cars lost from April 2015

  12. Relief available to SMEs on qualifying expenditure Only available to companies Current relief: 225% No planned increases. £10,000 spend de minimis abolished from April 2012 10% ‘above the line’ credit for large companies Patent Box - from April 2013: 10% rate of corporation tax on profits from Patents Research & Development

  13. Rate remains at 20% Threshold increased to £79,000 p.a. Zero rated, reduced rate (5%) and VAT exempt items remain largely the same VAT

  14. General anti-abuse rule Procurement contracts Loans by companies in partnership Consultation re partnerships & employment status Offshore payroll Anti avoidance measures

  15. No reintroduction of income splitting rules Cash basis tax calculations for small unincorporated businesses? Loan to employees National Insurance: £2,000 employment allowance ‘Downton Abbey’ relief Growth vouchers RTI – Good news at last! Help for businesses

  16. Reduction in corporation tax rates Loopholes being closed Capital allowances unchanged Company car benefits changes to come Tax planning opportunities still available To Summarise…

  17. Personal Tax Clive Relf FCA Tax Partner

  18. Income Tax Allowances • An estimated 24 million will benefit from increases BUT… those with incomes > £100,000 will gain nothing • £10,000 p.a. tax free goal to be achieved 1 year early

  19. The 40% Income Tax band • Many more (an extra 300,000) will become higher rate taxpayers come April 2013 with a further 400,000 slipping into 40% in April 2014 • 50%/45% rate on income > £150,000

  20. 50% tax rate going in April 2013 • 50% top rate of income tax reducing to45% in April 2013 • Planning • Defer bonuses/dividends • Change of accounting date

  21. Child benefit changes • New rules effective from 7 January 2013 • Income in household >£60,000p.a. and not yet opted out? • 28 March 2013 deadline for 2013/14 action • Planning • If income between £50,000 and £60,000

  22. Child benefit The cost of change • Cost (p.a.) Marginal Tax Rate (*) • 1 child £1,055 51% • 2 Children £1,752 60% • 3 Children £2,449 65% *If income between £50,000 + £60,000 *100% tax rate with 8 children!!

  23. National Insurance • No change to rates • £641 per month (or £148 per week) will be the “magic salary” to pay during 2013/14 to avoid tax and NIC but still earn a state pension credit • Nb: odd impact on pension entitlement on “stay at home parent” if child benefit not claimed

  24. State pension scheme changes • Single-tier state pensions (£144 per week) from April 2016 (was to be 2017) so contracting out goes from 2016 • 35 qualifying years required to achieve “full pension”…currently 30 years • Consider voluntary contributions…but first obtain State Pensions Statement from DWP…but complex • more relaxed rules to “top up” missing years will come into force on 6 April 2013

  25. Other pension scheme changes • Annual contributions allowance (currently £50,000) to fall to £40,000 in April 2014 • The lifetime allowance from pensions savings to be cut from £1.5million to £1.25million in April 2014 • Income draw down increase wef 26 March 2013…to become 120% of equivalent annuity (currently 100%)

  26. Cap on “unlimited” tax reliefs • New restrictions from April 2013 aimed at high earners • Won’t impact on pension, EIS relief or Gift Aid • Will impact on loss relief, interest payments etc. • New maximum relief will be higher of: • £50,000 p.a. and • 25% of your income

  27. Tax Relief Cap example • Richard (a young entrepreneur with income of £180,000 p.a.) invested £90,000 into a friend’s company in 2010. • The company went bust in 2013 and to maximise tax relief Richard elects to offset his £90,000 loss against his income. • Post March 2013 “relief cap” will be higher of: • £50,000 • £45,000 • Planning worthwhile

  28. Seed Enterprise Investment Scheme • Helpful to companies not able to raise external finance • Tax Incentive to invest in small early stage UK companies • £150,000 max funding/company • Generous tax breaks for investors • Max investment of £100,000 p.a

  29. Seed EIS example – gain 2012/13 David Jason sells his Trotter Inc. shares in Feb 2013 for £50,000 realising a gain of £40,000. … there’s £11,000 capital gains tax to pay (28%) As an alternative he decides to invest £40,000 into a stake in a new company just started by a friend… and does so in May 2013.

  30. Seed EIS – Scenario 1 – Success! Let’s assume David sells his new shares for £40,000 in 2016 Tax Breaks received Income tax @ 50% 20,000 Capital Gains Tax 11,000 31,000 Net cost of investment 9,000 Proceeds £40,000 … a gain of c350%

  31. Seed EIS – Scenario 2 – Failure! Let’s assume that by 2016 the company is totally worthless. Tax Breaks… as before 31,000 Add: value of loss relief in 2016(40,000 – 20,000) @ 45% (max) 9,000 Tax Saved (max) £40,000 … tax relief of 100%

  32. Capital Gains Tax • Rates unchanged at 18% and 28% • Entrepreneurs’ relief - can reduce rate to 10% (lifetime limit of £10million per individual) • Exemption £10,900 (£10,600) for 2013/14 • Private residence rules unchanged • Enterprise Management Incentive (EMI) reliefs now much more generous

  33. Refresher on Entrepreneurs’ Relief In September 2012 Bergerac Ltd was sold realising a capital gain of £4million. Mr Nettles qualified for entrepreneurs’ relief so paid tax at 10% only… a tax saving of £720,000 compared to the standard 28% rate. • Key Factors: • 5% minimum shareholder AND • Employee or officer AND • Last 12 months

  34. Enterprise Management (EMI)…you need to know this! • To incentivise/motivate key employees • 5% minimum shareholding no longer applies within companies • 12 month ownership window opens immediately options are granted for options exercised from April 2013

  35. Business – share relief for individuals • New Capital Gains Tax relief on sale of controlling share interests to employees….from 2014 • New “employee shareholder” status offering CGT exemption plus income tax and NIC benefits…from September 2013 • Removal of stamp duty on shares traded in growth markets (e.g. AIM)…from April 2014

  36. Charity news • Ability to claim Gift Aid relief on ≤ £5,000 of small donations p.a. from April 2013 • For individual donations < £20 • Charity needs a minimum 3 year clean “Gift Aid record” to qualify

  37. Home buying – Help to Buy Equity loans enhancement • Effective 1 April 2013 • New builds only… £600,000 max purchase • Available to all – not just first time buyers • Govt lend up to 20%... shared equity loans • So minimum 5% deposit will be possible • Available for 3 years

  38. Home buying – Help to Buy Mortgage guarantees • Coming from 1 April 2004 • All property purchases • Available to all buyers • Govt to guarantee % of borrowing to enable higher loan to value transactions to proceed • £600,000 max purchase price

  39. Savings • ISA annual limitTotal Cash • 2012/13 £11,280 £5,640 • 2013/14 £11,520 £5,760 • New Junior ISA £3,720 (was £3,600) • Compensation scheme now covers £85,000 per bank etc. • …….unless you live in Cyprus!!!

  40. Inheritance Tax – 1 million more liable! • Nil rate band frozen at £325,000 per person until at least 2019 • Business relief unchanged • BUT new rules to “limit” tax deductible loans coming • By 2019, estimated that 1million more will become liable to IHT (2.3 million today to become 3.3 million)

  41. Other announcements • £72,000 social care cost cap from April 2016 (was 2017) • Extra Equitable Life compensation for those buying a with profits annuity pre 1992 • New tax-free childcare vouchers up to £1,200 p.a. per child…available to wider audience…and higher income thresholds…..from Autumn 2015

  42. Fuel Duty • 3pence/litreduty increase in Sept 2013 cancelled • Petrol now 13pence/litre cheaper than it would have been • £7 saving when filling up a Ford Focus

  43. Worth deferring income until 2013/14? Opted out of child benefit yet? Capital gains….and SEED EIS Time to check your State Pension record Property bubble likely to continue To Summarise…

More Related