Welcome to our Autumn Statement 2013 edition of Tax Tips & News.
In this analysis we have mainly concentrated on the tax measures that will directly affect individuals, employers and small businesses.
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Table Of Contents
- Business Taxes
- Capital Taxes
- Tax Avoidance
The tax law is being changed in some areas of employee benefits and stamp duties where tax cases have shown that the legal position is unclear. Tax avoidance schemes and those who sell them also come in for more scrutiny. HMRC is to be exempt from the 1.1% cap on spending by government departments to give it the flexibility and funding necessary to deal with tax evasion.
This newsletter is based on the documents released on 5th December 2013. It is possible that a different position will be shown by the draft legislation which will be published on 10th December 2013. We will keep you informed of any significant developments.
NIC Exemption for Young Employees
- No CGT will apply on shares transferred which give rise to a controlling interest in the business passing to the employee ownership trust;
- No IHT will apply on shares or assets transferred to the employee-ownership trust; and
- Bonuses of up to £3,600 per employee per year will be tax free where the business is controlled by an employee-ownership trust.
For 2014/15 the main rates and thresholds for NI contributions are:
- Employer’s class 1 above £153/week not contracted out – 13.8%
- Employee’s class 1 not contracted out from £153 to £805/week – 12%
- Employee’s additional class 1 above £805/week – 2%
- Self-employed small earnings exemption – £5,885 per annum
- Self-employed class 4 from £7,956 to £41,865 per annum – 9%
- Self-employed class 4 additional rate above £41,865 per annum – 2%
- Self-employed class 2 – £2.75 per week
- Voluntary contributions class 3 – £13.90 per week
The PTS will be abolished from 6 April 2014, so SSP paid on and after that date will be an unrecoverable cost for all employers. However, employers will be able to reclaim SSP paid for periods up to 5 April 2014, if a claim is submitted by 6 April 2016.
The money saved by abolishing PTS will be invested in a new Health and Work Service, which will help sick employees get back to work by providing them with a return to work plan. Where the Heath and Work Service recommend a medical treatment for the sick employee, the employer can pay up to £500 towards this treatment with no tax charges for the employee. This tax exemption can also apply to medical treatments recommended by an occupational health service arranged by the employer.
From 6 April 2014 the employee will be taxed on the provision of a car as a benefit when the employer leases a car to the employee. Also from that date if the employee wishes to make payments for the private use of the company car or van to reduce the taxable benefit those payments must be made in the same tax year in which the vehicle is provided for private use.
- monthly limit for employees who save to acquire shares through a SAYE scheme increases from £250 to £500;
- annual value of free shares given to employees in a Share Incentive Plan (SIP) increases from £3,000 to £3,600;
- annual value of partnership shares granted under a SIP increases from £1,500 to £1,800.
The high level of small business rates relief (SBRR) will be extended to 31 March 2015, and the SBRR rules will be relaxed to allow businesses to expand into an additional property and retain the SBRR for one year.
If a business moves into a retail premises which has been empty for 1 year or more, the business rates on that property will be charged at 50% of the full rate for the first 18 months. This relief will apply where the empty property is re-occupied between 1 April 2014 and 31 March 2016.
- £1,000 to £4,000 for each homebuyer to spend on energy-saving measures; and
- New scheme for private landlords to improve the energy efficiency of their properties.
Further details are expected to be announced later.
Income Tax Allowances
Allowances for 2014/15 are…
- Personal allowance (born after 5 April 1948): £10,000
- Personal allowance (born between 6 April 1938 and 5 April 1948): £10,500
- Personal allowance (born before 6 April 1938): £10,660
- Minimum married couples allowance*: £3,140
- Maximum married couples allowance*: £8,165
- Blind person’s allowance: £2,230
- Income limit for allowances for age related allowances: £27,000
- Income limit for standard allowances: £100,000
* given where one partner was born before 6/4/1935, as 10% reduction in tax due.
Transferable Married Couples Allowance
This amount will increase if the total personal allowance increases year on year. However, the transfer can only take effect if both members of the couple are basic rate taxpayers or pay no income tax for the year.
Tax Rates and Thresholds
- Savings rate* (10%) – 0 to £2,880
- Basic rate (20%) – 0 to £31,865
- Higher rate (40%) – £31,866 to £150,000
- Additional rate (45%) – over £150,000
*The savings rate of 10% only applies if the individual’s net non-savings income does not exceed the savings rate limit. The higher rate and basic rate thresholds can be increased by paying personal pension contributions or gift aid donations.
State Pension Age
NI Contributions Over SPA
From October 2015 the government will permit people who have reached SPA to make voluntary NICs to top up their NI contributions record for state pension purposes. This will apply to people who reach SPA before 6 April 2016.
- Shares and cash ISA – £11,880
- Cash only ISA – £5,940
- Junior ISA and Child Trust Fund – £3,840
Selling Your Home
Gains Made by Non-residents
From 6 April 2015, gains accruing from that point on homes located in the UK, will be taxed in the UK, where the owner is not resident in the UK. Anyone who emigrates and then sells their former UK home (or investment properties) after living abroad for a while needs to watch out for this.