2013 Budget Summary & Tax Rate Centre
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Budget Report 20 March 2013
This Report, which was written immediately after the Chancellor of the Exchequer delivered his Budget Speech, is intended to provide an overview of the latest announcements and recent measures most likely to affect you or your business.
Throughout this guide we have included tips and ideas for effective tax and financial planning, but it is important to remember that this planning should be an ongoing, year-round process, rather than something that is left until the last minute.
We can help you to reassess your plans regularly, and adapt them as your personal and business circumstances change. With our help, you can plan for a rewarding and financially secure future.
Please note: while most taxation changes take effect from the start of the financial year, or tax year, some may not take effect until 2014, or later. Where relevant, details of these changes have been included in this Report. Throughout the Report, ‘HMRC’ refers to HM Revenue & Customs.
Budget Highlights
Defiant Chancellor pledges support for an ‘aspiration nation’
Delivering his fourth Budget statement to an animated House of Commons, Chancellor George Osborne pledged his support for ‘aspiration’ and vowed to face the UK’s economic challenges ‘head on’.
Confirming widespread concerns over the grim economic outlook, the Chancellor announced that the Office for Budget Responsibility had slashed the official growth forecast for 2013 from 1.2% to 0.6%. However, despite acknowledging that dealing with the deficit was taking ‘longer than hoped’, and that borrowing would rise to £114bn this year, the Chancellor insisted that the Government was ‘slowly but surely fixing our country’s economic problems’.
Heralding his Budget as a mandate for those who aspire to ‘work hard and get on’, the Chancellor unveiled some significant measures aimed at supporting businesses and individuals, with headline announcements including an additional reduction in the main rate of corporation tax, bringing the tax down to 20% from 2015, and a much-anticipated increase in the income tax personal allowance, which will see the threshold reaching the Coalition’s £10,000 target in 2014, a year earlier than originally planned.
Businesses are set to benefit from a new Employment Allowance, which will cut employers’ national insurance bills by up to £2,000 from next April, exempting an estimated 450,000 small businesses from paying any national insurance contributions.
Other measures include an annual £3bn boost for UK infrastructure from 2015, together with support for homebuyers through the extension of shared equity schemes, offering loans of up to 20% to buyers of new build homes.
The Chancellor also confirmed the Government’s recently announced plans to offer 20% tax relief on childcare up to the value of £1,200 a year per child from 2015, together with a bringing forward of both the new single flat-rate pension and a £72,000 cap on social care costs, to 2016.
Meanwhile, acknowledging the financial pressures facing families, the Chancellor confirmed the cancellation of the rise in fuel duty planned for September, and raised some cheer in the House with the announcement of the scrapping of the beer duty escalator.
- Corporation tax main rate to fall to 20%
- Income tax personal allowance to rise to £10,000 in 2014
- Employers’ national insurance cut by £2,000
- Tax-free childcare vouchers worth up to £1,200 per child
- 20% shared equity loans for new build homes
- September fuel duty rise scrapped
| 2013 Economic Forecasts | |
|---|---|
| UK economic growth | 0.6% |
| Government borrowing | £114bn |
| Inflation | 2.8% |
| Unemployment | 7.9% |
No Plan B’ – An economic background to the Budget
When George Osborne became Chancellor in the spring of 2010 the national budget deficit – the difference between the Government’s annual spending and receipts – was estimated at a record £163.4bn. Tackling the deficit was declared the Coalition’s ‘top priority’ and in his first Budget speech – the June 2010 ‘Emergency Budget’ – Chancellor Osborne outlined his plan to eliminate it completely by 2014/15. This would be achieved by a combination of lower public spending and tax rises in an approximate ratio of 80:20, signalling an approach known as ‘Plan A’ in political circles and dubbed by the media as an ‘austerity’ programme.
In reality, the Emergency Budget forecasts proved unattainable. In his 2013 Budget statement the Chancellor was forced to announce that by 2014/15 the deficit will stand at 5.9%, far from the originally predicted surplus of plus 0.3%.
There have been other difficulties for the Coalition, with economic growth slow at best and a ‘double-dip’ recession.
Yet the Chancellor has consistently rejected Labour’s calls for a ‘Plan B’ – which proposes borrowing more to spend on capital investments in the hope of stimulating growth – on the grounds that any positive effects of such actions would be far outweighed by the risk of an increased cost of borrowing, should the markets react badly to the Government’s change of course.
Even the loss of the UK’s AAA credit rating last month has not altered the Coalition’s determination to stick to Plan A. In a speech made just a fortnight before the 2013 Budget, Prime Minister David Cameron reaffirmed his Government’s commitment to its course, saying: ‘There are some people who say that our focus on deficit reduction is damaging growth, and what we need to do is to spend more and borrow more. It’s as if they think there’s some magic money tree. …If there was another way, an easier way, I would take it. But there is no alternative.’
Business Tax and Investment Incentives
Corporation Tax
Corporation tax rates and bands are as follows:
| Financial Year to | 31 March 2014 | 31 March 2013 |
|---|---|---|
| Taxable profits | ||
| First £300,000 | 20% | 20% |
| Next £1,200,000 | 23.75% | 25% |
| Over £1,500,000 | 23% | 24% |
The main rate of corporation tax will be reduced to 21% for the financial year commencing 1 April 2014 and from 1 April 2015 it will be further reduced and unified with the small profits rate, giving a new unified rate of 20%.
Annual Investment Allowance (AIA)
As announced in the Autumn Statement, the AIA has been temporarily increased for a two-year period from £25,000 to £250,000 per annum for all qualifying investments in plant and machinery made on or after 1 January 2013. Provisions apply to accounting periods that straddle the start and end dates.
Research and development (R&D)
A 10% ‘Above the Line’ (ATL) credit for large company R&D expenditure will be introduced. This will apply to qualifying expenditure incurred on or after 1 April 2013. The credit will be fully payable, net of tax, to companies with no corporation tax liability. The ATL credit scheme will be optional until it becomes mandatory on 1 April 2016. Companies that do not elect to claim the ATL credit will be able to continue claiming R&D relief under the current large company scheme until 31 March 2016.
Creative industry tax credits
As previously announced, new corporation tax reliefs will be introduced for the video games, animation and high-end television industries. The animation and high-end television tax reliefs are expected to be approved shortly and will start on 1 April 2013. The video games tax relief will be introduced following State Aid approval.
Patent Box
From 1 April 2013, the Patent Box will allow companies to elect to apply a 10% rate of corporation tax to all profits attributable to qualifying patents, whether paid separately as royalties or embedded in the sales price of products. The regime will also apply to other qualifying intellectual property rights such as regulatory data protection, supplementary protection certificates and plant variety rights.
Small businesses
From 6 April 2013 all unincorporated businesses will be able to choose to deduct certain expenses on a flat rate basis.
In addition, a new voluntary cash basis for calculating tax for small businesses will be introduced. The new cash basis will allow eligible self-employed individuals and partnerships to calculate their profits on the basis of the cash that passes through their businesses. Businesses will be eligible if they have annual receipts of up to £79,000 and they will be able to continue to use the cash basis until receipts reach £158,000. Businesses in the scheme will generally not need to distinguish between revenue and capital expenditure. Eligible barristers will be able to choose either to use the new cash basis and simplified expenses or the current accruals basis. The existing cash basis legislation for barristers will be repealed (except for barristers already using it, for the remainder of their qualifying period).
UK residential property
There is to be a package of taxes for certain companies, partnerships with company members and managers of collective investment schemes (collectively referred to as non-natural persons) which own residential property in the UK worth over £2m.
These taxes are: stamp duty land tax at 15% on acquisition of residential property (this came into effect on 21 March 2012); an annual tax of between £15,000 and £140,000 on relevant dwellings (effective from 1 April 2013); and capital gains tax (CGT) at 28% on any gain on disposal (effective from 6 April 2013).
There will be reliefs for property development, investment rental and trading businesses, residential properties open to the public for at least 28 days a year on a commercial basis, residential properties held for employee accommodation, residential properties owned by a charity and held for charitable purposes, working farmhouses, diplomatic properties, and some other publicly-owned residential properties.
Limited Liability Partnerships (LLPs)
The Government will consult on measures to remove the presumption of self-employment for LLP partners so as to tackle the disguising of employment relationships through LLPs, and counter the artificial allocation of profits to partners (in both LLPs and other partnerships) to achieve a tax advantage.
Disincorporation relief
The Government will introduce a disincorporation relief for five years from April 2013. The relief will allow a company to transfer goodwill and an interest in land to its shareholders so that no corporation tax charge arises on the transfer. The relief will be available to businesses with total qualifying assets not exceeding £100,000.
Employment Allowance
As from April 2014 every business and charity will be entitled to a £2,000 Employment Allowance. Employers will need to confirm their eligibility through their regular payroll process. This confirmation will ensure that up to £2,000 will be deducted from their employers’ national insurance contributions (NICs) liability over the course of the year’s PAYE payments.
Enterprise Management Incentives (EMI)
As announced at the 2012 Budget, the Government will extend Entrepreneurs’ Relief to cover gains made on shares acquired through the exercise of EMI qualifying options. The measure applies to shares acquired on or after 6 April 2012 that are disposed of on or after 6 April 2013. The relief will apply even if the individual does not hold a 5% stake in the company.
Seed Enterprise Investment Scheme (SEIS)
Any investors making capital gains in 2013/14 will receive a 50% CGT relief when they re-invest those gains into SEIS qualifying companies in either 2013/14 or 2014/15.
There will be a change to the legislation so that some eligible companies will not inadvertently be disqualified from taking advantage of the SEIS regime, by virtue of having been established by a corporate formation agent. This will have effect in relation to shares issued on or after 6 April 2013.
Capital taxes
Capital gains tax (CGT)
The Annual Exempt Amount for 2013/14 has been increased to £10,900.
Inheritance tax (IHT)
The rate of IHT remains at 20% for lifetime transfers and at 40% for death estates (including transfers within seven years before death brought back into the estate for the purpose of calculating the tax due at death).
In Budget 2010 it was announced that the threshold below which estates are not liable for IHT, the nil-rate band, would be frozen at £325,000 until April 2015.
The Government announced on 11 February 2013 that the IHT nil-rate band would remain frozen until April 2018.
IHT – spouses and civil partners domiciled overseas
All individuals, irrespective of their domicile status, benefit from an IHT nil-rate band, currently £325,000. Transfers of assets between spouses and between civil partners, whether gifts made during a person’s lifetime or transfers of assets occasioned by the death of one of the couple, are generally exempt from IHT.
But where the spouse or civil partner to whom the assets are transferred does not have a UK domicile there is a lifetime limit (cap) on the value of the assets that can be transferred free of IHT. The cap is currently £55,000.
Legislation will be introduced in Finance Bill 2013 to reform the IHT treatment of transfers between UK-domiciled individuals and their non-UK domiciled spouse or civil partners in two ways:
- the cap will be increased to the level of the prevailing nil-rate band level, and
- under a new election regime, individuals domiciled other than in the UK and who are married or in a civil partnership with a UK domiciled person will be able to elect to be treated as UK-domiciled for IHT purposes.
IHT – limiting the deduction for liabilities
Legislation will be introduced in Finance Bill 2013 to amend the IHT 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. This only applies in certain circumstances.
Duties
Tobacco duty
The duty rates for all tobacco products will be increased by 2% above the rate of inflation (based on RPI) from 6pm on 20 March 2013.
Alcohol duty
The duty rates for spirits, wine and made-wine, cider and perry will increase by 2% above the rate of inflation (based on RPI) with effect from 25 March 2013. This will add 2p to the price of a litre of cider, 10p to the price of a bottle of wine and 38p to the price of a bottle of spirits.
The duty rates on beer will decrease with effect from 25 March 2013. This will reduce the price of an average strength pint of beer by 1p.
Stamp duty on junior shares
In Finance Bill 2014 the Government will bring forward legislation that abolishes stamp duty and Stamp Duty Reserve Tax on share transactions in UK companies quoted on Small Company Growth Markets. This is effective from April 2014.
National Minimum Wage (NMW)
The current NMW rates are as follows:
| Age | 21 and over | 18-20 | 16 and 17 | Apprentice rate* |
|---|---|---|---|---|
| From 1 October 2012 | £6.19 | £4.98 | £3.68 | £2.65 |
* Rate applies to apprentices under 19, or those 19 and over in the first year of apprenticeship.
Income Tax and Personal Savings
Income tax rates
| 2013/14 | 2012/13 | ||
|---|---|---|---|
| Basic rate band – income up to | £32,010 | £34,370 | |
| Starting rate for savings | *10% | *10% | |
| Basic rate | 20% | 20% | |
| Dividend ordinary rate | 10% | 10% | |
| Higher rate – income over | £32,010 | £34,370 | |
| Higher rate | 40% | 40% | |
| Dividend upper rate | 32.5% | 32.5% | |
| Additional rate – income over | £150,000 | £150,000 | |
| Additional rate | 45% | 50% | |
| Dividend additional rate | 37.5% | 42.5% | |
| *Starting rate is for savings income up to the starting rate limit of £2,790 (£2,710) within the basic rate band. The rate applies to any balance of the limit remaining after allocating taxable non-savings income. | |||
Personal allowances (ages are as at the end of the tax year)
| Personal allowances (PA) | 2013/14 | 2012/13 |
|---|---|---|
| Born after 5 April 1948/under 65 † | *£9,440 | †*£8,105 |
| Born after 5 April 1938 and before 6 April 1948/65-74 † | *£10,500 | †*£10,500 |
| Born before 6 April 1938/75 and over † | *£10,660 | †*£10,660 |
The PA for those aged under 65 increases from 6 April 2013 to £9,440. The advantage to higher rate payers is countered by a lowering of the higher rate threshold, to £32,010 from 6 April 2013.
| Married couple’s allowance (MCA) | 2013/14 | 2012/13 |
|---|---|---|
| Either partner born before 6 April 1935 (relief restricted to 10%) | *£7,915 | *£7,705 |
| *Age-related allowances are reduced by £1 for every £2 that adjusted net income exceeds £26,100 (£25,400) to a minimum PA of £9,440 (£8,105) and to a minimum MCA of £3,040 (£2,960). Where adjusted net income exceeds £100,000, PA is reduced in the same way until it is nil. | ||
Individual Savings Accounts (ISAs)
The annual ISA subscription limit for 2013/14 will rise from £11,280 to £11,520, up to £5,760 of which can be invested in a cash-only ISA.
The subscription limit for Junior ISAs, which are available to those aged under 18 who do not have a Child Trust Fund account, will rise from £3,600 to £3,720.
Personal allowances for 2014/15
For 2014/15, the personal allowance for those born after 5 April 1948 will be increased to £10,000, and the basic rate limit will be reduced to £31,865.
As set out at Budget 2011, once the personal allowance has reached £10,000, it will then increase by Consumer Prices Index (CPI) in future years, starting from 2015/16.
Exemption threshold for employment-related loans
The threshold for employment-related ‘taxable cheap loans’ to be treated as earnings of the employment, will increase from the current threshold of £5,000 to £10,000 for 2014/15 and subsequent tax years.
As long as the total outstanding balances on all such loans do not exceed the threshold at any time in a tax year, there is no tax charge.
Consequently employers will no longer be required to report details of small loans where the outstanding balance is £10,000 or less throughout a tax year.
Employee shareholder status
In October 2012 the Government announced its intention to introduce a new ’employee shareholder’ status. Individuals adopting the status will be exempt from CGT on the disposal of up to £50,000 of shares acquired under the employee shareholder agreement.
In addition, on acquisition of the shares the first £2,000 of share value received by the employee shareholder will not be subject to income tax or NICs.
These measures will apply to shares received from 1 September 2013, when the new status comes into force.
Pension savings
The Chancellor has confirmed the reduction of the standard lifetime allowance to £1.25m and the annual allowance to £40,000 for tax year 2014/15 onwards.
Legislation will also introduce a transitional protection regime (fixed protection 2014) for individuals with UK tax relieved pension rights of more than £1.25m or who think they may have rights in excess of £1.25m by the time they take their pension benefits. Individuals will need to notify HMRC by 5 April 2014 if they want to rely on fixed protection 2014.
Individuals with fixed protection 2014 will be entitled to a personal lifetime allowance of the greater of £1.5m and the standard lifetime allowance.
Child Trust Funds
The Government will consult on options for transferring savings held in Child Trust Funds into Junior ISAs.
Life insurance: qualifying policies
Under the current regime there is no upper limit on the investment premiums payable into a qualifying policy (QP), allowing individuals to obtain unlimited relief from higher and additional rates of income tax.
Legislation will be introduced in Finance Bill 2013 to provide for an annual premium limit of £3,600 for QPs from 6 April 2013.
Transitional rules will apply to policies issued between 21 March 2012 and 5 April 2013 inclusive. Policies issued in this period will be restricted so that relief is only attributable to premiums payable, or treated as payable, in the transitional period and for premiums payable up to the £3,600 annual limit thereafter.
Cap on unlimited tax reliefs
As previously announced, a cap will be applied to certain income tax reliefs claimed by individuals from 6 April 2013 where they are otherwise unlimited. For anyone seeking to claim more than £50,000 in reliefs, a cap will be set at 25% of income (or £50,000, whichever is greater). However, following widespread controversy the cap on charitable donations will not go ahead.
Domicile and residence
Legislation will be introduced to provide a statutory residence test for individuals from 2013/14, and to eliminate the concept of ‘ordinary residence’ for tax purposes as far as possible. The legislation will also provide for a tax year to be split into a UK part and an overseas part in certain circumstances, together with new rules for the taxation of certain income and gains during a period of temporary non-residence.
Value Added Tax
| From | 1 Apr 2013 |
|---|---|
| Standard rate | 20% |
| VAT fraction | 1/6 |
| Reduced Rate | 5% |
| Current Turnover Limits | |
| Registration – last 12 months or next 30 days over | £79,000 from 1 April 2013 |
| Deregistration – next 12 months under | £77,000 from 1 April 2013 |
| Annual accounting scheme | £1,350,000 |
| Cash accounting scheme | £1,350,000 |
| Flat-rate scheme | £150,000 |
Tax and Travel
Car and fuel benefits
The taxable petrol and diesel car benefit is based on the car’s CO2 emissions. It is calculated using the car’s UK list price and applying the ‘appropriate percentage’ as shown in the table on the right. The car fuel benefit is calculated by applying the same percentages to the fuel benefit charge multiplier, which for 2013/14 is £21,100.
For cars which cannot produce CO2 engine emissions under any circumstances when driven (‘zero emission cars’, including those powered solely by electricity), the appropriate percentage is reduced to 0%, thereby reducing the car benefit charge to nil. For cars emitting between 1g/km and 75g/km the appropriate percentage is reduced to 5% (8% for diesel) for five years from 6 April 2010.
Future changes
The lower threshold will be reduced from 115g/km to 110g/km with effect from April 2014. The lowest appropriate percentages will remain at 0% and 5%. The appropriate percentage will increase by 1% for all vehicles with CO2 emissions between 95g/km and 210g/km, to a maximum of 35%.
From April 2015, there will be two new appropriate percentage bands for company cars emitting 0-50g/km CO2 (5%) and 51-75g/km CO2 (9%). The remaining appropriate percentages are increased by 2% for cars emitting more than 75g/km CO2 to a new maximum of 37%.
From April 2016, all the appropriate percentages are increased by 2% up to the maximum of 37%. The diesel supplement will be removed, so that diesel cars will be subject to the same level of tax as petrol cars.
VAT on fuel for private use in cars
Where businesses wish to reclaim the input VAT on fuel which has some degree of private use, they must account for output VAT on a scale charge. The table shows the VAT chargeable for quarters commencing on or after 1 May 2013.
Plug-in Grants
Motorists (private or business) purchasing new qualifying ultra-low emission cars can receive a grant of 25% towards the cost of the vehicle, up to a maximum of £5,000. The scheme also covers new qualifying ultra-low emission vans, where the available grant will be 20% towards the cost of the vehicle, up to a maximum of £8,000. Vehicles with CO2 emissions of 75g/km or less, including electric, plug-in hybrid and hydrogen-fuelled cars, are all potentially eligible for the subsidy. There are strict criteria to be met before specific vehicles can be confirmed as eligible under the rules of the scheme.
| CO2 emissions | Appropriate percentage | Quarterly VAT | ||
|---|---|---|---|---|
| (g/km) | Petrol % | Diesel % | Fuel scale charge £ | VAT on charge |
| £ | ||||
| Zero | 0 | 0 | 168 | 28.00 |
| Up to 75 | 5 | 8 | 168 | 28.00 |
| 76-94 | 10 | 13 | 168 | 28.00 |
| 95 – 99 | 11 | 14 | 168 | 28.00 |
| 100 – 104 | 12 | 15 | 168 | 28.00 |
| 105 – 109 | 13 | 16 | 168 | 28.00 |
| 110 – 114 | 14 | 17 | 168 | 28.00 |
| 115 – 119 | 15 | 18 | 168 | 28.00 |
| 120 – 124 | 16 | 19 | 168 | 28.00 |
| 125 – 129 | 17 | 20 | 253 | 42.17 |
| 130 – 134 | 18 | 21 | 269 | 44.83 |
| 135 – 139 | 19 | 22 | 286 | 47.67 |
| 140 – 144 | 20 | 23 | 303 | 50.50 |
| 145 – 149 | 21 | 24 | 320 | 53.33 |
| 150 – 154 | 22 | 25 | 337 | 56.17 |
| 155 – 159 | 23 | 26 | 354 | 59.00 |
| 160 – 164 | 24 | 27 | 371 | 61.83 |
| 165 – 169 | 25 | 28 | 388 | 64.67 |
| 170 – 174 | 26 | 29 | 404 | 67.33 |
| 175 – 179 | 27 | 30 | 421 | 70.17 |
| 180 – 184 | 28 | 31 | 438 | 73.00 |
| 185 – 189 | 29 | 32 | 455 | 75.83 |
| 190 – 194 | 30 | 33 | 472 | 78.67 |
| 195 – 199 | 31 | 34 | 489 | 81.50 |
| 200 – 204 | 32 | 35 | 506 | 84.33 |
| 205 – 209 | 33 | 35 | 523 | 87.17 |
| 210 – 214 | 34 | 35 | 539 | 89.83 |
| 215 – 219 | 35 | 35 | 556 | 92.67 |
| 220 – 224 | 35 | 35 | 573 | 95.50 |
| 225 and above | 35 | 35 | 590 | 98.33 |
Mileage rates
Changes to the HMRC business mileage rates are announced from time to time. The rates from 1 March 2013 are as follows:
| Vehicle | First 10,000 miles | Thereafter |
|---|---|---|
| Car / Van | 45p | 25p |
| Motorcycle | 24p | 24p |
| Bicycle | 20p | 20p |
| Car – fuel only advisory rates | ||
|---|---|---|
| Engine Size | Petrol | LPG |
| 1400cc or less | 15p | 10p |
| 1401 – 2000cc | 18p | 12p |
| Over 2000cc | 26p | 18p |
| Engine Size | Diesel | |
| 1600cc or less | 13p | |
| 1601 – 2000cc | 15p | |
| Over 2000cc | 18p | |
The fuel only advisory rates relate to company cars only. They can be applied as a tax-free maximum rate for employees claiming for petrol used on business journeys and for employees reimbursing their employers with the cost of petrol used for private journeys.
HMRC will consider claims for a higher maximum rate, if it can be demonstrated that it is necessary for an employee to use a car with higher than average fuel costs.
Car costs – Vehicle Excise Duty (VED) rates
VED (‘Car Tax’) rates also reflect emissions, with lower scale rates for cars using alternative fuels. The following table shows the rates which apply from 1 April 2013 for cars registered on or after 1 March 2001:
| VED Band | CO2 emissions (g/km) | First year rate | Standard rate | |
|---|---|---|---|---|
| Petrol & Diesel | Alternative fuels | |||
| A | Up to 100 | £0 | £0 | £0 |
| B | 101-110 | £0 | £20 | £10 |
| C | 111-120 | £0 | £30 | £20 |
| D | 121-130 | £0 | £105 | £95 |
| E | 131-140 | £125 | £125 | £115 |
| F | 141-150 | £140 | £140 | £130 |
| G | 151-165 | £175 | £175 | £165 |
| H | 166-175 | £285 | £200 | £190 |
| I | 176-185 | £335 | £220 | £210 |
| J | 186-200 | £475 | £260 | £250 |
| K* | 201-225 | £620 | £280 | £270 |
| L | 226-255 | £840 | £475 | £465 |
| M | Over 255 | £1065 | £490 | £480 |
| * includes cars emitting over 225g/km registered before 23 March 2006 | ||||
Company vans
The taxable benefit for the unrestricted private use of vans is £3,000. There is a further £564 taxable benefit if the employer provides fuel for private travel.
| Van and fuel charge | Van | Fuel | Total |
|---|---|---|---|
| Tax (20% taxpayer) | £600 | £112.80 | £712.80 |
| Tax (40% taxpayer) | £1,200 | £225.60 | £1,425.60 |
| Tax (45% taxpayer) | £1,350 | £253.80 | £1,603.80 |
| Employer’s Class 1A NICs | £414 | £77.83 | £491.83 |
The flat rate of £3,000 is reduced to nil for vans emitting zero CO2. There is no fuel benefit for such vans.
National Insurance Contributions (NICs)
| 2013/14 | |||
|---|---|---|---|
| Class 1 (not contracted out) | Employer | Employee | |
| Payable on weekly earnings of: | |||
| Up to £109 (lower earnings limit) | Nil | Nil | |
| £109 – £148 (employers’ earnings threshold) | Nil | 0%* | |
| £148.01 – £149 (employees’ earnings threshold) | 13.8% | 0%* | |
| £149.01 – £797 (upper earnings limit) | 13.8% | 12% | |
| Over £797 | 13.8% | 2% | |
| *No NICs are actually payable but notional Class 1 NIC is deemed to have been paid; this protects certain basic state benefit entitlements. Over state retirement age, the employee contribution is generally nil. | |||
| Class 1A | on relevant benefits | 13.8% | Nil |
| Class 2 | Self employed | £2.70 per week | |
| Limit of net earnings for exception | £5,725 per annum | ||
| Class 3 | Voluntary | £13.55 per week | |
| Class 4** | Self employed on profits | ||
| £7,755 – £41,450 | 9% | ||
| Excess over £41,450 | 2% | ||
| **Exemption applies if state pension age was reached by 6 April 2013. | |||
Real Time Information and PAYE penalties
HMRC’s new Real Time Information (RTI) regime comes into effect in April 2013, and will require most employers to submit information about the payments and deductions they have made under PAYE at or before the time of payment.
HMRC has agreed a temporary relaxation of reporting arrangements for smaller businesses. Until 5 October 2013, employers with fewer than 50 employees who pay their staff weekly or more regularly and find it difficult to report at the time of payment may send information by the date of their regular payroll, but no later than the end of the tax month. HMRC will continue to assess the impact of RTI on the smallest businesses, throughout the summer.
Historically, inaccuracies have gone undetected for long periods of time as the overall tax liability has not been reviewed and calculated until after the end of the tax year. The aim of the new system is to ensure that the correct deductions are made from pay, resulting in more individuals paying the right amount of income tax and NICs throughout the tax year.
HMRC has confirmed that for the tax years 2012/13 and 2013/14 there will be no change to the existing penalties for late filing of returns, and there will be no penalties for in-year Full Payment Submissions (FPSs) that are submitted late. However, penalties may be charged after the end of the tax year, based on the final FPS for the year.
Employers must submit an FPS every time they make a payment to an employee. To avoid a late filing penalty, the final FPS for an employee must be reported by 19 April. After 19 April, employers can submit an Earlier Year Update by 19 May to avoid a penalty. Employers who do not pay any employees in a tax month must send an Employer Payment Summary by the 19th of the following tax month.
For 2012/13, penalties will not be applied for inaccuracies found within the in-year FPS. However, they may be charged after the end of the tax year based on the final FPS for the year. Penalties may also apply for inaccuracies found within the in-year returns for the 2013/14 tax year, using existing criteria. From 6 April 2014 there will be new late filing and late payment penalties.
Other measures announced
New childcare scheme from Autumn 2015
A new childcare scheme will be introduced to support working families with their childcare costs. For childcare costs of up to £6,000 per year per child, support of 20% will be available worth up to £1,200. From the first year of operation, all children under five will be eligible and the scheme will build up over time to include children under 12.
The scheme will provide support for families where all parents are in work and not receiving support through the Childcare Element of Working Tax Credits/Universal Credit and where each is earning less than £150,000 a year. Support will be provided through a childcare account redeemable at any registered childcare provider.
The new scheme offer will be phased in from Autumn 2015 as the current system of Employer Supported Childcare is phased out. The Government will consult on the detail of delivery.
Start Up Loans
As announced in January 2013, £30m of additional funding has been provided to expand the Start Up Loans scheme in England and increase the age limit from 24 to 30.
Business Bank
The Government will publish the Business Bank’s first business strategy on 22 March 2013. This will set out an accelerated timetable for how the Business Bank will deploy £1bn of new capital to improve existing access to SME support schemes. Elements will include: the launch of a £300m investment scheme in spring 2013 to help ‘diversify and expand the supply of lending’ to SMEs; the provision of an additional £50m for the Business Angel Co-investment Fund for SMEs; an extension of the Enterprise Capital Fund programme to include a £25m venture capital Catalyst Fund for investment in SMEs; and maintaining the lenders’ guarantee cap at 20% for Enterprise Finance Guarantee loan portfolios for 2013/14.
General Anti-Abuse Rule (GAAR)
At the Autumn Statement, the Government confirmed its intention to introduce a new GAAR to ‘provide a new deterrent to abusive avoidance schemes and strengthen HMRC’s means of tackling them’. The taxes it will apply to include: income tax, NICs, corporation tax (including amounts treated as corporation tax), capital gains tax, inheritance tax, petroleum revenue tax and stamp duty land tax.
The measure will apply to ‘abusive tax arrangements’ entered into on or after Royal Assent to Finance Bill 2013.
Tax agreements with Isle of Man, Jersey and Guernsey
The UK has agreed a comprehensive package of measures with the Isle of Man, Guernsey and Jersey governments to ‘clamp down on those who choose to hide their money offshore’.
The package consists of:
- agreement to automatically exchange a wide range of financial information on UK taxpayers with accounts in the Isle of Man, Guernsey and Jersey which will significantly enhance HMRC’s ability to crack down on those who do not declare their offshore affairs; and
- a disclosure facility to allow people to come forward to disclose their previous tax affairs in advance of the information being automatically exchanged.
HMRC has signed Memoranda of Understanding with each of the Crown Dependencies.
Gift Aid small donations scheme
The new Gift Aid small donations scheme will come into effect from 6 April 2013. Announced at the 2011 Budget, the scheme enables eligible charities and Community Amateur Sports Clubs to claim a Gift Aid style top-up payment on up to £5,000 of small donations, without the need to collect Gift Aid declarations.
Charities will be able to claim the new payment on donations of £20 or less.
Universal Credit
Introduced as part of the Welfare Reform Act, Universal Credit will replace a range of existing benefits and tax credits with a more streamlined system. The benefit will be exempt from income tax and will involve a single monthly payment, covering all qualifying family members.
Universal Credit aims to improve work incentives and will be available to individuals who are in work and on a low income, as well as those who are out of work. The benefit will be introduced in a series of phases, starting from October 2013, with the process expected to be completed by the end of 2017.
Personal Tax Statement
From the 2014/15 tax year the Government will introduce a new Personal Tax Statement for around 20 million taxpayers, including Self Assessment taxpayers and those in PAYE who receive a coding notice.
The statement will detail the income tax and NICs they have paid and their average tax rates. It will also outline how this contributes to public spending, outlining the proportions used for education, health and welfare.
The aim is to improve the transparency of the tax system.
According to sample Treasury calculations, someone earning just over £25,000 would pay £5,700 in direct taxes. Of that, more than £1,900 would go on welfare and pension payments, nearly £1,000 on health and £750 on education. £360 would also be spent on national debt repayments.
2013/14 Tax Calendar
| April | May | June | July |
| August | September | October | November |
| December | January(14) | February | March |
| June 2013 | |
|---|---|
| 30 | End of CT61 quarterly period. Annual adjustment for VAT partial exemption calculations (March VAT year end). |
| August 2013 | |
|---|---|
| 2 | Submission date of P46 (Car) for quarter to 5 July. |
| 31 | Annual adjustment for VAT partial exemption calculations (May VAT year end). |
| September 2013 | |
|---|---|
| 30 | End of CT61 quarterly period. Last day for UK businesses to reclaim EC VAT chargeable in 2012. |
| November 2013 | |
|---|---|
| 1 | £100 penalty if 2013 paper Tax Return not yet filed. Additional penalties may apply for further delay. |
| 2 | Submission date of P46 (Car) for quarter to 5 October. |
Tax Rates Centre
Our Tax Rates Centre provides a summary of some of the essential tax rates, dates and figures for 2013/14.
2013/14 Tax Rates Centre is for guidance only and professional advice should be obtained before acting on any information contained as no responsibility can be accepted for loss occasioned as a result of action taken or refrained from in consequence of its contents.
Income Tax
| Income tax rates | Note | 2013/14 | 2012/13 |
|---|---|---|---|
| Basic rate band – income up to | £32,010 | £34,370 | |
| Starting rate for savings | *10% | *10% | |
| Basic rate | 20% | 20% | |
| Dividend ordinary rate | 10% | 10% | |
| Higher rate – income over | £32,010 | £34,370 | |
| Higher rate | 40% | 40% | |
| Dividend upper rate | 32.5% | 32.5% | |
| Additional rate – income over | £150,000 | £150,000 | |
| Additional rate | 45% | 50% | |
| Dividend additional rate | 37.5% | 42.5% | |
| * Starting rate is for savings income up to the starting rate limit of £2,790 (£2,710) within the basic rate band. The rate applies to any balance of the limit remaining after allocating taxable non-savings income. | |||
| Trusts | |||
| For interest in possession trusts on all income, and other trusts on the first £1,000 of income (“standard rate band”): | |||
| dividend ordinary rate | 5 | 10% | 10% |
| savings income | 5 | 20% | 20% |
| other income | 5 | 20% | 20% |
| Income of other trusts above £1,000 is taxed at the special trust rates: | |||
| rate applicable to trusts | 45% | 50% | |
| dividend trust rate | 37.5% | 42.5% | |
| Personal allowance (PA) | |||
| Born after 5 April 1948 / under 65 † | 1,4 | £9,440 | † £8,105 |
| Born after 5 April 1938 and before 6 April 1948 / 65-74 † | 1,2,4 | £10,500 | † £10,500 |
| Born before 6 April 1938/ 75 and over † | 1,2,4 | £10,660 | † £10,660 |
| Blind person’s allowance | £2,160 | £2,100 | |
| Married couple’s allowance (MCA) | |||
| Either partner born before 6 April 1935 (relief restricted to 10%) | 1,3,4 | £7,915 | £7,705 |
| Tax Shelters | |||
| Venture Capital Trust (VCT) up to | £200,000 | £200,000 | |
| Enterprise Investment Scheme (EIS) up to | £1,000,000 | £1,000,000 | |
| Seed Enterprise Investment Scheme up to | £100,000 | £100,000 | |
| Golden Handshake max. | £30,000 | £30,000 | |
| Rent a Room – exempt on gross annual rent up to | £4,250 | £4,250 | |
| Construction Industry Scheme deduction rate: | |||
| Standard (registered) | 20% | 20% | |
| Higher (not registered) | 30% | 30% | |
Notes
- Ages are as the end of the tax year.
- The higher rates of personal allowances are reduced by £1 for each £2 of excess income over £26,100 (£25,400) until the basic allowance is reached.
- Similar limits apply to the married couple’s allowance. The reduction in allowance is subject to a minimum level of £3,040. (For couples married before 5 December 2005, only the husband’s income is taken into account. For those married on or after 5 December 2005 or in a civil partnership, only the higher earner’s income is taken into account).
- The personal allowance, including the minimum age-related allowance, is reduced by £1 for every £2 that net adjusted income exceeds £100,000.
- Where there are several trusts created by the same settlor, the “standard rate band” is divided equally between them, subject to a minimum band of £200 for each trust.
Capital Gains Tax
| Capital gains tax rates and bands for 2013/14 | |
|---|---|
| On chargeable gains | |
| Total taxable gains and income: up to £32,010 from £32,011 | 18% 28% |
| Annual exemption | |
| – individual | £10,900 |
| – most trustees | £5,450 |
| Chattels exemption | |
| (proceeds per item or set) | £6,000 |
Entrepreneurs’ Relief
Qualifying gains will be taxed at 10%.
Claims may be made on more than one occasion up to a “lifetime” total of £10 million.
Notes
- Transfers between husband and wife or civil partners living together are generally exempt.
- Capital gains of all trusts for 2013/14 are taxed at the rate of 28%. Where there are several trusts created by the same settlor, the annual exemption is divided equally between them, subject to a minimum exemption of £1,090 for each trust.
Corporation Tax
Corporation tax rates and bands are as follows:
| Financial Year to | 31 March 2014 | 31 March 2013 |
|---|---|---|
| Taxable profits | ||
| First £300,000 | 20% | 20% |
| Next £1,200,000 | 23.75% | 25% |
| Over £1,500,000 | 23% | 24% |
Capital Allowances
Plant and Machinery:
| Investment for use in Enterprise Zones, energy saving and environmentally beneficial equipment, new zero-emission goods vehicles, low CO2 emission (up to 95g/km) cars, natural gas/hydrogen refuelling equipment: First year allowance. |
100% Annual investment allowance (AIA) – on first £250,000 of investment (excludes cars and other expenditure already qualifying for 100% FYA)100%*Writing down allowance on expenditure not qualifying for AIA or FYA: Long-life assets, integral features of buildings, cars over 130g/km 8% Other plant and machinery18%Business premises renovation: max initial allowance100%
* Transitional rules may apply
Value Added Tax
| From | 1 April 2013 |
|---|---|
| Standard rate | 20% |
| VAT fraction | 1/6 |
| Reduced rate | 5% |
| Taxable Turnover Limits | |
| Registration – last 12 months or next 30 days over | £79,000 from 1 April 2013 |
| Deregistration – next 12 months under | £77,000 from 1 April 2013 |
| Cash accounting scheme – up to | £1,350,000 |
| Optional flat rate scheme – up to | £150,000 |
| Annual accounting scheme – up to | £1,350,000 |
VAT on fuel for private use in cars
Where businesses wish to reclaim the input VAT on fuel which has some degree of private use, they must account for output VAT on a scale charge.
The table shows the VAT chargeable for quarters commencing on or after 1 May 2013.
| CO2 emissions (g/km) | Quarterly VAT | |
|---|---|---|
| Fuel scale charge £ | VAT on charge £ | |
| Zero | 168 | 28.00 |
| Up to 75 | 168 | 28.00 |
| 76-94 | 168 | 28.00 |
| 95 – 99 | 168 | 28.00 |
| 100 – 104 | 168 | 28.00 |
| 105 – 109 | 168 | 28.00 |
| 110 – 114 | 168 | 28.00 |
| 115 – 119 | 168 | 28.00 |
| 120 – 124 | 168 | 28.00 |
| 125 – 129 | 253 | 42.17 |
| 130 – 134 | 269 | 44.83 |
| 135 – 139 | 286 | 47.67 |
| 140 – 144 | 303 | 50.50 |
| 145 – 149 | 320 | 53.33 |
| 150 – 154 | 337 | 56.17 |
| 155 – 159 | 354 | 59.00 |
| 160 – 164 | 371 | 61.83 |
| 165 – 169 | 388 | 64.67 |
| 170 – 174 | 404 | 67.33 |
| 175 – 179 | 421 | 70.17 |
| 180 – 184 | 438 | 73.00 |
| 185 – 189 | 455 | 75.83 |
| 190 – 194 | 472 | 78.67 |
| 195 – 199 | 489 | 81.50 |
| 200 – 204 | 506 | 84.33 |
| 205 – 209 | 523 | 87.17 |
| 210 – 214 | 539 | 89.83 |
| 215 – 219 | 556 | 92.67 |
| 220 – 224 | 573 | 95.50 |
| 225 and above | 590 | 98.33 |
Inheritance Tax
| 2013/14 | 2012/13 | |
|---|---|---|
| Standard threshold | £325,000 | £325,000 |
| Combined threshold maximum for married couples and civil partners | £650,000 | £650,000 |
| Rate of tax on balance: | ||
| Chargeable lifetime transfers Transfers on, or within 7 years of, death | 20% *40% | 20% *40% |
| * A lower rate of 36% applies where 10% or more of a deceased person’s net estate is left to charity | ||
All lifetime transfers not covered by exemptions and made within seven years of death will be added back into the estate for the purpose of calculating the tax payable. Tax attributable to such transfers is then subject to Taper Relief:
| Years before death | 0-3 | 3-4 | 4-5 | 5-6 | 6-7 |
|---|---|---|---|---|---|
| Tax reduced by | 0% | 20% | 40% | 60% | 80% |
| Main Reliefs | |
|---|---|
| Business property: | |
| – business or interest therein | 100% |
| – qualifying shareholdings in unquoted* companies | 100% |
| – land, buildings, machinery, or plant used by transferor’s controlled company or partnership | 50% |
| Agricultural property | 50% or 100% |
| *Unquoted companies include those listed on AIM | |
Main Exemptions
- Most transfers between spouses and civil partners.
- The first £3,000 of lifetime transfers in any tax year plus any unused balance from previous year.
- Gifts of up to but not exceeding £250 p.a. to any number of persons.
- Gifts in consideration of marriage or civil partnership of: up to £5,000 by a parent, up to £2,500 by a grandparent or great grandparent, or up to £1,000 by any other person.
- Gifts made out of income that form part of normal expenditure and do not reduce the standard of living.
- Gifts to charities, whether made during lifetime or on death.
Vehicle Benefits
Chargeable on employees earning £8,500 or over (including benefits), and directors.
Car Benefit
The taxable benefit is calculated as a percentage of the list price of the car, on the day before it was first registered, plus certain accessories. This percentage depends upon the rate at which the car emits carbon dioxide (CO2), and the fuel type.
For cars which cannot produce CO2 engine emissions under any circumstances when driven (‘zero emission cars’, including those powered solely by electricity), the appropriate percentage is reduced to 0%, thereby reducing the car benefit charge to nil.
For cars emitting between 1 and 75g/km the appropriate percentage is reduced to 5% (8% for diesel) for 5 years from 6 April 2010.
You can find the appropriate percentage for 2013/14 using the following table:
| CO2 emissions (g/km) | Appropriate percentage | |
|---|---|---|
| Petrol % | Diesel % | |
| Zero | 0 | 0 |
| Up to 75 | 5 | 8 |
| 76-94 | 10 | 13 |
| 95-99 | 11 | 14 |
| 100-104 | 12 | 15 |
| 105-109 | 13 | 16 |
| 110-114 | 14 | 17 |
| 115-119 | 15 | 18 |
| 120-124 | 16 | 19 |
| 125-129 | 17 | 20 |
| 130-134 | 18 | 21 |
| 135-139 | 19 | 22 |
| 140-144 | 20 | 23 |
| 145-149 | 21 | 24 |
| 150-154 | 22 | 25 |
| 155-159 | 23 | 26 |
| 160-164 | 24 | 27 |
| 165-169 | 25 | 28 |
| 170-174 | 26 | 29 |
| 175-179 | 27 | 30 |
| 180-184 | 28 | 31 |
| 185-189 | 29 | 32 |
| 190-194 | 30 | 33 |
| 195-199 | 31 | 34 |
| 200-204 | 32 | 35 |
| 205-209 | 33 | 35 |
| 210-214 | 34 | 35 |
| 215 and above | 35 | 35 |
How to find out how much CO2 your company car emits – see:
|
|
Reliable emissions data is not widely available for cars registered before 1 January 1998. For them, the following taxable percentages apply, regardless of fuel type:
| Engine capacity | Taxable % |
|---|---|
| Up to 1400cc | 15% |
| 1401 – 2000cc | 22% |
| Over 2000cc | 32% |
Car fuel benefit
The taxable car fuel benefit, for 2013/14, is calculated by applying the CO2 based car benefit percentage to the car fuel benefit charge multiplier of £21,100.
If the employee pays for the full cost of all fuel for private journeys (usually including home to work) there will be no car fuel benefit. In all other cases the full tax charge will be due.
| Fuel-Only Mileage Rates | ||
|---|---|---|
| HMRC advisory mileage rates at the time of the Budget for employee private mileage reimbursement or employer reimbursement of business mileage in company cars are: | ||
| Engine Size | Petrol | LPG |
| 1400cc or less | 15p | 10p |
| 1401cc – 2000cc | 18p | 12p |
| Over 2000cc | 26p | 18p |
| Engine Size | Diesel | |
| 1600cc or less | 13p | |
| 1601cc – 2000cc | 15p | |
| Over 2000cc | 18p | |
Example: A company car driver has a car which, on the day before it was first registered, had a list price of £21,000. It runs on petrol, and emits 177 g/km of CO2.
If we assume the driver pays tax at 40%, the 2013/14 tax bill on the car is: £21,000 x 27% x 40% = £2,268
If the employer provides any fuel used for private journeys and is not reimbursed for the cost, the 2013/14 tax bill for the fuel is: £21,100 x 27% x 40% = £2,279.
Company vans
The taxable benefit for the unrestricted use of company vans is £3,000 plus a further £564 of taxable benefit if fuel is provided by the employer for private travel.
| Van and fuel charge | Van | Fuel | Total |
|---|---|---|---|
| Tax (20% taxpayer) | £600 | £112.80 | £712.80 |
| Tax (40% taxpayer) | £1,200 | £225.60 | £1,425.60 |
| Tax (45% taxpayer) | £1,350 | £253.80 | £1,603.80 |
| Employer’s class 1A NICs | £414 | £77.83 | £491.83 |
Van drivers can avoid a benefit charge if they agree not to use the van for personal journeys. Driving to and from work is acceptable so long as there is a reasonable amount of business use.
The flat rate of £3,000 is reduced to nil for vans which cannot produce C02 engine emissions under any circumstances when driven. There is no fuel benefit for such vans.
Mileage Allowances
It is quite normal practice for employees to be reimbursed at a reasonable mileage rate for business use of their own vehicles. The income tax and national insurance contributions (NICs) position is as follows:
| A statutory system of Approved Mileage Allowance Payments (AMAPs) applies for employees using their own vehicles for business journeys, as follows: | |
|---|---|
| Cars and vans: on the first 10,000 miles in the tax year on each additional mile above this | 45p per mile 25p per mile |
| Motorcycles | 24p per mile |
| Bicycles | 20p per mile |
It is no longer possible to make a claim for tax relief based on the actual receipted bills, nor claim capital allowances or interest on loans related to car purchases.
Unless the employee is reimbursed at a rate higher than the AMAP, the payments do not need to be reported on a P11D. If the employer pays less than these rates, it is possible for the employee to claim income tax relief for the shortfall.
Rates of up to 5p per mile, per passenger, are also tax- and NICs- free when paid for the carriage of fellow employees on the same business trip. This now also covers volunteers who drive for hospital car services etc, even though they are not strictly employees.
National Insurance Contributions
| Class 1 (not contracted out) | Employer | Employee |
|---|---|---|
| Payable on weekly earnings of | ||
| Up to £109 (lower earnings limit) | Nil | Nil |
| £109 – £148 (employers’ earnings threshold) | Nil | 0%* |
| £148.01 – £149 (employees’ earnings threshold) | 13.8% | 0%* |
| £149.01 – £797 (upper earnings limit) | 13.8% | 12% |
| Over £797 | 13.8% | 2% |
| Over state pension age, the employee contribution is generally nil | ||
* No NICs are actually payable but notional Class 1 NIC is deemed to have been paid; this protects certain state benefit entitlements. Class 1A (on relevant benefits)13.8%Nil Class 1B (on PAYE settlement arrangement)13.8%Nil Class 2 (Self employed)£2.70 per weekLimit of net earnings for exception£5,725 per annum Class 3 (Voluntary)£13.55 per week Class 4* (Self employed on profits) £7,755 – £41,4509%Excess over £41,4502%*Exemption applies if state pension age was reached by 6 April 2013.
Note
For those earning between £109 per week and £770 per week, employers receive a rebate of 3.4% on contracted out salary related schemes, and employees a rebate of 1.4%.
Key Dates and Deadlines
| Payment Dates | |
|---|---|
| Income Tax (including Class 4 NIC) | |
| 31 July 2013 | 2012/13 second payment on account |
| 31 January 2014 | 2012/13 balancing payment, and 2013/14 first payment on account |
| 31 July 2014 | 2013/14 second payment on account |
| 31 January 2015 | 2013/14 balancing payment, and 2014/15 first payment on account |
| Class 1A NICs | |
| 19 July 2013 | 2012/13 payment due |
| Capital Gains Tax | |
| 31 January 2014 | 2012/13 Capital Gains Tax |
| 31 January 2015 | 2013/14 Capital Gains Tax |
| Corporation Tax | |
| 9 months and one day after the end of the accounting period | |
| Inheritance Tax | |
| 6 months after the end of the month of death. | |
| For chargeable lifetime transfers between 6 April and 30 September, due date is 30 April in the following year. | |
| For chargeable lifetime transfers between 1 October and 5 April, due date is six months after the end of the month in which the transfer was made. | |
| Latest Filing/Issuing Deadlines – 2012/13 PAYE Returns | |
| 19 May 2013 | P14, P35, P38 and P38A – file online. |
| 31 May 2013 | Issue P60s to employees. |
| 6 July 2013 | P9D, P11D and P11Db – also issue copies to employees Form 42 (reporting of employment-related securities) |
| 2013 Self Assessment Tax Return (SATR) | |
| 31 October 2013 | Last filing date – SATR Paper Version |
| 30 December 2013 | SATR Online if outstanding tax (less than £3,000) to be included in 2014-15 PAYE code |
| 31 January 2014 | Last filing date – SATR Online |
Pension Premiums
There is no financial limit on the amount that may be contributed to a registered pension scheme. The maximum amount on which an individual can claim tax relief in any tax year is the greater of the individual’s UK relevant earnings or £3,600.
If total pension input exceeds the annual allowance of £50,000 there may be a tax charge on the excess.
| Maximum age for tax relief | 74 |
| Minimum age for taking benefits | 55 |
| Lifetime allowance charge – lump sum paid | 55% |
| Lifetime allowance charge – monies retained | 25% |
| on cumulative benefits exceeding | £1,500,000* |
| Maximum tax-free lump sum | 25%* |
*Subject to transitional protection for excess amount.
Note – For most pension arrangements, the total pension input is the aggregate of contributions paid into all the individual’s pension savings during the relevant pension input period (PIP). Contributions should be the gross amount (i.e. including the tax relief attaching to the contributions). The PIP is usually the year to the anniversary date which falls within the relevant tax year. There are special rules for defined benefit arrangements.
Charitable Giving
Gift Aid
- Individuals are able to claim higher rate relief on cash gifts and payments to charities under gift aid. Basic rate tax is treated as having been deducted, so you must pay enough tax for the year to cover the tax witheld from your Gift Aid payment.
- Special tax reliefs apply to gifts to charities of certain types of shares and securities, or land and buildings.
- Individuals have the opportunity to make a claim for charitable donations made in one tax year to be treated as if they had been made in the previous tax year. For example, a request could be made for Gift Aid payments made between 6 April 2013 and the date that the 2013 return is filed to be treated as if they were made in the year to 5 April 2013. This would mean that a payment could rank for higher rate tax relief for 2012/13, even if the donor is liable at basic rate only in 2013/14. The request would normally be made by completing the relevant box in the 2013 tax return, and the opportunity to carry back donations is lost once that return has been filed (provided this is no later than 31 October 2013 or 31 January 2014, as appropriate). It is not possible to amend the 2013 tax return in order to carry back a donation.
Give As You Earn
- Employees may authorise participating employers to deduct donations from their gross salary for forwarding to their nominated charities.
- Employees receive tax relief in full on their donations.
Savings and Investments
ISAs
| Individual Savings Accounts (ISAs) | |
|---|---|
| Overall investment limit | £11,520 |
| Including cash maximum of | £5,760 |
Notes
- Investments in ISAs are free of income tax and capital gains tax.
- Those aged 16-17 can invest in a cash ISA.
- ISAs allow you to take your money out at any time without losing tax relief and furthermore you are not required to declare income and capital gains from ISA savings.
- The annual investment limit for a Junior ISA is £3,720.
Some Useful Rates
| Weekly Benefit | |||
|---|---|---|---|
| 2013/14 | 2012/13 | ||
| Basic Retirement Pension | |||
| Single person | £110.15 | £107.45 | |
| Couple | £176.15 | £171.85 | |
| Child Benefit | |||
| First eligible child | £20.30 | £20.30 | |
| Each subsequent child | £13.40 | £13.40 | |
| Statutory Sick Pay (SSP) | |||
| Average weekly earnings £109 or over (2012/13 £107) | £86.70 | £85.85 | |
| Statutory Maternity Pay (SMP) | |||
| 90% of average weekly pay | First 6 weeks | First 6 weeks | |
| Lower of £136.78 (2012/13 £135.45) or 90% average weekly earnings | |||
| Minimum rate | £98.10 | £96.30 | |
| Statutory Adoption Pay (SAP) | 39 weeks | 39 weeks | |
| Statutory Paternity Pay (SPP)* | 2 weeks | 2 weeks | |
| Both SAP and SPP | |||
| Lower of £136.78 (2012/13 £135.45) or 90% average weekly earnings | |||
| Minimum rate | £98.10 | £96.30 | |
| *Additional statutory paternity pay (ASPP) may be available in certain circumstances. | |||
| Jobseekers Allowance | |||
| Single person | £71.70 | £71.00 | |
| Couple | £112.55 | £111.45 | |
| National Minimum Wage** | From 1 October 2013 | From 1 October 2012 | |
| 21 and over | £TBA | £6.19 p.h. | |
| 18 – 20 | £TBA | £4.98 p.h. | |
| 16 and 17 | £TBA | £3.68 p.h. | |
| Apprentices** | £TBA | £2.65 p.h. | |
| **Rate applies to apprentices under 19, or those 19 and over in the first year of apprenticeship. | |||
Stamp Taxes
The rate of stamp duty / stamp duty reserve tax on the transfer of shares and securities is generally payable at 0.5%.
Stamp Duty Land Tax (SDLT)
| Transfers of property are subject to SDLT at the following rates: | |
|---|---|
| Value up to £125,000 (£150,000 for non-residential property) | Nil |
| Over £125,000 (£150,000) to £250,000 | 1% |
| Over £250,000 to £500,000 | 3% |
| Over £500,000 – £1,000,000 * | 4% |
| Over £1,000,000 * – £2,000,000 * | 5%* |
| Over £2,000,000* | 7%* |
| * Residential property only. A 15% rate will apply to properties over £2,000,000 purchased by certain “non-natural persons”. | |
New Leases
SDLT is charged according to the net present value of all the rental payments over the term of the lease (NPV), with a single rate of 1% on residential NPV’s over £125,000 and on non-residential NPV’s over £150,000.
VAT is excluded from treatment as consideration provided the landlord has not opted to charge VAT by the time the lease is granted.
Lease premiums
SDLT on premiums is the same as for transfers of land (except that the zero rate does not apply where the annual rent of a non-residential property is £1,000 or more.)
