Following the Budget on 20 March 2013, HM Treasury has issued a budget summary. In it they state that the ongoing impact of the financial crisis, the euro area crisis and the effect of inflation on incomes and business costs, have produced a more subdued and uneven recovery than expected. They continue to say that this budget announces:
- Increasing capital spending plans by £3bllion a year from 2015-16, funded through reductions in current spending.
- A reduction in Departmental spending of £1.1billion in 2013-14 and £1.2 billion in 2014-5. The schools and health budgets remain unchanged.
- Public sector pay awards will be limited to an average of up to 1 per cent in 2015-16.
Some of the main provisions announced are as follows:
1. A reduction in the main rate of Corporation Tax to 20% from April 2015. There are no plans to reduce the small company rate, so from that date there will be a single rate applying to all companies. This will not affect the majority of our clients.
2. Another change however, this time from April 2014, will affect more of you. From that date, all employers will receive an allowance of up to £2,000 each year towards their employer’s NIC liability. This could have a major impact for one-man limited companies.
3. Of more importance to individuals, the tax free allowance will increase to £10,000 from April 2014. This means that everyone will be able to earn nearly £200 per week free of any income tax. Importantly, however, this increase does not apply to National Insurance. Therefore, it will not reduce the number of employers affected by the new RTI regulations.
4. Aimed to help the building industry, as well as first time buyers, two schemes have been announced helping people to invest in their own home. One of these, for instance, provides a five year interest free loan of 20% of the purchase price of a newly built house, reducing the effective deposit required to 5%.
5. The fuel duty planned for September 2013 has been cancelled. At the same time, it was announced that the duty on beer has been reduced by 1p per pint with effect from Sunday 24th March 2013.
6. Tax-free childcare vouchers of £1,200 per child will be introduced from April 2015. Unlike the current scheme, these will not be dependent upon the employer making them available.
7. The implementation of both the single-tier state pension and the £72,000 cap on social care costs will both be brought forward to April 2016.
8. Finally, there will be a “significant crack down on tax avoidance and evasion” and we will look at some of these in more detail in the next couple of months.
We shall be issuing a more detailed budget summary in the next few days. If you wish to receive it then please go to our website and subscribe to our newsletter.