A quick look at the major changes announced in this year’s budget speech.
Personal Tax Allowance
The amount of income that workers under 65 can earn before they pay tax will increase over the next two tax years.
- From April 2013, the personal allowance will go up from 8,105 to £9,440
- In April 2014, it will go up again to £10,000
According to the Government, a typical basic-rate taxpayer will pay then pay £705 less in income tax. But at the same time, the higher tax rate threshold will drop over the same time, effectively cancelling out some of the gain for higher income earners.
40% Tax Band
- The starting point for paying 40% tax will this year drop from £42,475 to £41,451
An estimated 400 000 will enter the higher tax bracket, meaning one in six taxpayers will be paying tax at the 40% higher rate.
National insurance changes
- The new employment allowance kicks in on April 6th – £2,000 deduction from Class 1 NI from April 2014
- This will be claimed through the RTI process
The government has introduced a new ‘Help to Buy’ scheme as a way to “support a new generation in realising the dream of home ownership”.
- Those who qualify will be eligible for a shared equity loan worth up to 20% of the value of the property
- 5% deposit required from the homebuyer
- Interest free for the first five years
- Maximum property price considered will be £600,000
- There will be no cap on the maximum amount an individual can earn to be eligible
The Government is dropping corporation tax to 20% by 2015.
- The rate drops from 28% to 24% in 2013
- In 2014, it drops again to 21%
- In 2015, it goes down to 20% and all businesses will be on the same rate
The vat registration threshold will be increased to £79,000 from April this year.
Two new CO2 bands for the company car benefit will be introduced:
- 5% – 0-50g Co2
- 9% – 51-75g Co2
The 100% capital allowance on low emission vehicles has been extended to March 2018.
The capital gains tax “holiday” has been extended for the sale of a company to employees.
Beneficial Loans Limit
The beneficial loans limit will be increased from £5,000 to £10,000 from 2014/15 for low or zero interest loans to directors and employees.
If you need tax or financial planning advice or reliable, professional tax and accounting services, visit www.1stcontact-accounting.com or call 0808 141 1624.