Budget briefing
Friday 21 March 2014
Disclaimer
This seminar is of a general nature and is not a
substitute for professional advice. No
responsibility can be accepted for the
consequences of any action taken or refrained
from as a result of what is said.
Introduction
The agenda for this morning:
Introduction
Personal taxes, Pensions
Corporate taxes
Employment taxes
Q&A
Introduction
•
“A Budget for a
resilient economy”
•
Pensions – radical
shift
•
A Budget for
entrepreneurs?
•
Anti-avoidance ….
Two major issues
•
Growth in economy
•
Public Finances (deficit > £100bn a year)
= Very little room for manoeuvre
Change in employment
Change in employment (‘000)
600
500
400
300
Oct 2011 - Oct 2012
Oct 2012 - Oct2013
200
100
0
Temporary
Part Time
Full Time
Total
-100
Source: Financial Times: 2013
Export – Budget boost
•
Additional funding to UKTI to assist companies
•
UK Export Finance
–
–
£3bn additional loans
One third reduction in interest rates
Economic Outlook
• The UK economy is gaining traction and we don’t expect the recovery to
relapse. Although growth will be modest by historic standards.
• Monetary policy is likely to remain accommodative for the foreseeable
future. Forward guidance has moved towards monitoring the quantum of
‘excess capacity’ in the economy.
• Interest rate increase unlikely until nominal wage costs start to accelerate –
latter half of 2015
• Inflation now below the target level takes a lot of pressure off the MPC.
Continued disinflation might even produce some real earnings growth.
• Recovery has been ‘route one’ to date but there are encouraging signs that
both net exports and capital expenditure will contribute to a re-balancing in
2014.
7
Anti-Avoidance
•
Tax payments up front (DOTAS and GAAR)
•
Direct recovery of debts (>£1,000)
•
Specific provisions in all areas, including some relaxations
•
Retrospective measures, e.g. clarification on rollover provision
Personal Taxes & Pensions
Budget Briefing
Income Tax
Personal Allowance
Basic rate band: 20%
Higher rate: 40%/32.5%
Additional rate: 45%/37.5%
2014/15
2015/16
£10,000
£10,500
£0 - £31,865
£0 - £31,785
£31,866 - £150,000
£31,786 – £150,000
Over £150,000
Over £150,000
ISA changes - NISA
•
NISA
–
–
•
£11,880
£15,000
Max 50% Cash
Junior ISA
–
–
•
From 6/4/14 - 1/7/14
From 1/7/14 - 5/4/15
From 6/4/14 - 1/7/14
From 1/7/14 - 5/4/15
£3,840
£4,000
Can transfer existing equity ISAs to cash
NISAs and vice versa
Other Investments
•
Premium Bond Max Limit
–
–
–
•
£30,000 now
£40,000 from June
£50,000 from 2015/2016
Pensioner Bonds
–
–
–
–
–
2.8% 1 year fix
4% 3 year fix
Max £10,000 investment
Income Taxable
Available January 2015
Seed Enterprise Investment Scheme – SEIS
•
Sister of EIS
•
A quick resume
Income tax relief at 50% (and carry back)
– Capital gains exemption and rollover for 50%
– Relief £100,000 capped.
– Gross assets < £200,000 and other conditions.
–
•
Targeted at small, early stage companies needing equity finance
•
Originally limited shelf life.
•
Now a permanent relief
Budget Briefing
Capital Gains Tax “CGT”
•
•
•
2014/15 annual exemption £11,000
No rate changes
Principal private residence relief
From 6 April 2014, 36 months final period deemed occupation reduces to
18 months
- Limited exceptions made
-
Inheritance Tax
•
£325,000 nil rate band frozen until 2017/18. Indexed in accordance with CPI
thereafter
Partnerships
Budget announcements
•
Class 2 NICs to be collected via self-assessment
•
PAYE to be introduced for salaried members
Previously announced changes
•
Salaried members of LLPs
•
Mixed partnerships
•
‘Tax-motivated’ disposals of assets
Property
Enveloped dwellings
•
Previously UK residential property >£2m. Now
>£500k.
•
SDLT @ 15% on purchase (20 March 2014)
•
ATED @ £7k on property £1m to £2m (1 April 2015)
•
ATED @ £3.5k on property £500k to £1m (1 April
2016)
•
CGT @ 28% on ATED-related gains in line with ATED
extension
Budget Briefing
Non-residents
•
Consultation to charge CGT on future gains of UK residential
property from April 2015
•
Review of availability of personal allowance
Current pension deadlines
•
Lifetime allowance reduction from £1.5m to £1.25m from 6th
April 2014
– Fixed protection – stop contributions
– Individual protection – continue contributions
•
Annual allowance
– Reducing from £50,000 to £40,000
– Pension years not tax years
•
Voluntary NICs
•
Pension flexibility increased – but for how long?
Corporate Taxes
Budget 2014
•
Corporation Tax rates
•
Capital allowances
•
Research & Development relief
•
Anti-Avoidance
•
Share Reporting
•
VAT
Corporation Tax Rates
•
FY 2014
21%
•
FY 2015
20%
•
Small Companies Rates
20%
Don’t forget
•
Patent box rate
10%
Associated companies
•
Limited impact due to unified CT rate of 20%
from 1 April
•
Simplified rules relevant to patent box and
capital allowances regimes
Capital allowances
•
Annual Investment allowance
–
–
•
Enhanced Capital allowances
–
–
•
doubled to £500,000 from 1 April 2014
extended to 31 December 2015
revisions to qualifying list
qualifying capital expenditure in designated enterprise
zones extended to 31 March 2020
Mineral extraction planning costs
–
annual writing down allowance increased from 10% to 25%
(after Royal Assent of Finance Bill 2014)
Research & Development Relief
Payable credit to loss-makers
The Relief
Enhanced deduction
– Cash in Rate
– Effective rate
–
225%
11%
24.75%
FY 2014
Enhanced deduction
– Cash in rate
– Effective rate
–
SME’s only
< 500 employees
– Turnover < €100m
– Balance sheet < €86m
–
225%
14.5%
32.63%
Creative sector tax breaks
•
Theatre productions from 1 September 2014
25% for qualifying touring productions
– 20% for other qualifying productions
–
•
Extension of film tax reliefs
–
film tax credit for surrenderable losses
25% on first £20m of qualifying production expenditure
• 20% thereafter
•
–
•
minimum UK expenditure qualification reduced from 25% to 10%
Video games tax relief and high-end television tax relief
extension of video games tax relief to goods and services provided
from within EEA
– cap on subcontracting of £1m per game
–
(above subject to state aid clearance)
Loan relationship and derivative
contract legislation
•
Changes to the group continuity rules
–
–
to counter avoidance re: intra group transfers of
loans and derivative contracts
company leaving a group on or after 1 April 2014
(within six years of transfer) required to bring in
to account both credits and debits
Share reporting
•
Online services
•
Register all share option schemes from April
2014
•
File EMI1s electronically from April 2014
•
EMI40, Form 42 etc. file online from April
2015
VAT
•
VAT registration limit raised from £79,000 to £81,000
•
Deregistration limits raised from £77,000 to £79,000
–
•
effective 1 April 2014
Removal of “prompt payment discount’ VAT calculation
1 May 2014 (telecommunications and broadcasting supplies)
– 1 April 2014 (all other supplies)
–
•
Reverse charge for wholesale transactions in gas and power
•
B2C supplies of telecommunications, broadcasting and eservices to be taxed in country of consumption
Mini one-stop shop (MOSS) will allow single EU VAT registration
– Effective 1 January 2015
–
Employment Tax Update
Content
•
Tax and NI rates
•
Payroll
•
Benefits in kind
•
Anti-avoidance
•
Tax Simplification
2014/15 Tax and NI rates
•
Personal allowances £10,000 (1000L)
•
NI (employer’s and employee’s) aligned at
£153 pw
•
NI rates remain unchanged
Payroll
•
Employment allowance – claim up to £2,000
•
SSP Percentage Threshold Scheme abolished
•
RTI dashboard – check your PAYE payments
•
RTI interest and penalties
–
–
–
interest from April 2014
automatic late filing penalty from October 2014
automatic late payment penalty from April 2015
•
Digital service for employees to amend benefits
•
P46 replaced by starter checklist
Vehicles from 6 April 2014
•
Car benefit starts at 5% for 1 – 75g/km
•
Van benefit increases from £3,000 to £3,090
•
Car fuel benefit multiplier increases from
£21,100 to £21,700
•
Van fuel benefit increases from £564 to £581
Vehicles from 6 April 2014
•
Payment for private use of a company car/van
in the relevant tax year
•
Where an employer leases a car to an
employee, the benefit is taxed as a car benefit
rather than as employment earnings
Other Benefits from 6 April 2014
•
Employer funded occupational health
treatments
–
£500 tax exemption for medical treatments
•
Childcare vouchers and childcare allowance
•
Beneficial loans
small loan exemption limit increased to £10,000
– average official rate down to 3.25% for 2014/15
–
From 6 April 2015 onwards
•
Minor changes to company car and fuel
benefit calculations (bands and multipliers)
•
From 6 April 2015 - max CO2% = 37%
•
April 2016 - 3% diesel supplement abolished
•
Reduced van benefit charge for zero emission
vans (starting with 20% of the standard
charge for 2015/16 increasing on a sliding
scale back to the full charge in 2020/21)
Anti-avoidance
•
Offshore intermediary companies
•
Onshore employment intermediaries
•
Dual contracts
Tax Simplification
•
Government consultation
payrolling benefits
– general exemption for non-taxable expenses
– abolition of the £8,500 threshold
– trivial benefits exemption
–
•
Government to review the rules on travel and
subsistence expenses
•
Government to consult on CIS Summer 2014
Questions & Answers