The Budget is the most important event in the UK’s economic calendar when the Chancellor announces the government’s taxation and spending plans for the coming year. The main points are summarised here:
Annual Investment Allowance (AIA)
The maximum amount of the AIA has been increased from £250,000 to £500,000 for all qualifying expenditure on plant and machinery made from 1 April 2014 for corporation tax and 6 April 2014 for income tax. After 31 December 2015 the limit will be reduced to £25,000. Transitional rules will apply.
Research and Development (R&D)
From 1 April 2014 the rate of R&D payable tax credit for loss making SMEs will be increased from 11% to 14.5%
Seed Enterprise Investment Scheme (SEIS)
The SEIS and the associated capital gains (CGT) relief for re-investing chargeable gains in SEIS shares are to be made permanent.
Employers NIC for under 21s
As announced in the 2013 Autumn, from 6 April 2015 employers will no longer be acquired to pay Class 1 secondary NICs on earnings paid up to the Upper Earnings Limited to an employee under the age of 21. This will apply to both existing employees and to employers taking on new staff. No individual’s state pension entitlement will be affected by the measure.
Real Time Information (RTI)
Micro business (with nine or fewer employees) have been granted additional time to comply with HM Revenue & Customs new RTI reporting requirements.
Under RTI, employers must submit their PAYE information to HMRC on or before the day of payment. HMRC previously granted temporary relaxation of the RTI regulations for employers with fewer than 50 employees who pay their staff weekly or more regularly and find it difficult to report at the time of payment.
These employers have been allowed to send information by the date of their regular payroll, but no later than the end of the tax month. While this relaxation of the rules will come to an end as planned in April 2014, HMRC has announced that eligible micro businesses will now be given until April 2016 to prepare for RTI. Until this time they may submit PAYE data on or before the last payday in the tax month. The concession will not apply to business that start up during this period.
Born after 5 April 1948
Born after 5 April 1938 and before 6th April1948
Born before 6th April 1938
Married couple’s allowance (MCA)
Either partner born before 6 April 1935
(relief restricted to 10%)
Changes to Allowances and Rate Bands from 2015
The Chancellor announced that from 6 April 2015:
· The personal allowance for all those born after 5 April 1938 will be £10,500
· The basic rate band will be reduced to £31,785 and
· The starting rate will be 0% and will apply to a maximum of £5,000 of savings income.
Transferable Tax Allowance for Married Couples
An individual will be entitled to transfer £1,050 of their personal allowance to their spouse or civil partner, from 6 April 2015, so long as neither is paying tax at more than the basic rate. From 6 April 2016, the transferable amount will be 10% of the personal allowance.
The Chancellor announced some changes to apply on or after 27 March 2014 :
· Increased the maximum income that a drawdown pensioner (member or dependent) with a capped drawdown pension fund can choose to receive to 150% of the “basis amount”.
· Reduced the minimum income threshold for flexible drawdown to £12,000
· Allow members over 60, with total pension savings of £30,000 or less to take out all of those savings as one or more trivial commutation lump sum and
· Increase the size of a small pension pot which can be taken as a lump sum from £2,000 to £10,000 and the number or personal pension pots that can be taken as a lump sum under the small pot rules from two to three.
Theatre Tax Relief
A new corporation tax relief for theatrical productions and touring theatrical productions is to be introduced. The Government will consult shortly after the Budget on the design of the relief.
If the changes announced impact your business or you would like to discuss any points in greater detail, please get in touch with your nearest Rothmans office.