Autumn Statement – Tax Provisions

Business Tax Corporation Tax.  The main Corporation Tax rate for Financial Year 2014 will be reduced by a further 1% to 21%.  Bank levy will increase to prevent banks benefiting from the reduction. The main CT rate for Financial Year 2013 is 23% and the Small Profit rate is 20%. Capital Allowances.  The Annual Investment Allowance will be increased from £25,000 to £250,000 per annum for a 2 year period commencing from 1 January 2013. Tax accounting.  A simpler income tax scheme for small unincorporated businesses will be introduced for the tax year 2013-14 to allow:
  • Eligible self employed individuals and partnerships to calculate their profits on the basis of the cash that passes through their business. They will generally not have to distinguish between revenue and capital expenditure
  • All unincorporated businesses will be able choose to deduct certain expenses on a flat rate basis.
Fuel duty.  The 3.02 pence per litre fuel duty increase that was due to take effect on 1 January 2013 is cancelled and the increase that was planned for 1 April 2013 will be deferred until 1 September 2013. Anti-avoidance.  New measures to prevent (from 5 December 2012):
  1. Foreign bank levies – which are not allowable deductions for Income Tax or    Corporation Tax purposes.
  1. Tax mismatch scheme – which reduce Corporation Tax liability through asymmetric tax treatment of loans or derivatives.
  2. Property return swaps – which convert capital losses into income losses.
  3. Manufactured payments – where schemes involve stock lending arrangements.
  4. Payments of patent royalties – relief for non trade payments to be abolished.
Avoidance using partnerships will be targeted. Personal Tax Personal allowances.   For the tax year 2013-14 the Personal Allowance will increase to £9,440 and the basic rate limit will be set at £32,010. For 2014-15 and 2015-16 the increase in the higher rate threshold will be capped at 1%. National Insurance contributions.  Weekly – Employees class 1: £149-£797: 12%.  £797+: 2%.  Employers class 1: £148+: 13.8%.  Yearly – self-employed class 2: £5725+ : 2.7 per week.  Class 4: £7755 – £41,450: 9%.  £41,450+ 2%. Pension contributions.  For tax year 2014-15 onwards the annual allowance for pensions tax relieved savings will be reduced from £50,000 to £40,000.  The standard lifetime allowance for pensions tax relieved savings will be reduced from £1.5 million to £1.25 million.  A transitional ‘fixed protection’ regime will be introduced for those who believe they may be affected by the reduction in the lifetime allowance. Inheritance Tax.  The IHT nil-rate band was frozen at Budget 2010 at its current level of £325,000 until April 2015.  For 2015-16 the band will be increased by 1% rounded up to £329,000. Other points Of particular interest in the North-east is the announcement that new infrastructure spending will include the upgrading to motorway of the whole of the A1. For more detail, contact Richard Sowler at rsowler@setfords.co.uk or on 01624 673978 or 07624 235000. The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Setfords Solicitors are a national full service law firm, with tax law solicitors in Douglas and across the country.