With the budget around the corner it is time to take stock of what has been and what will arrive in its place. There are three topical areas where we can state with reasonable certainty what is set to change because of published draft clauses for the 2014 Financial Bill. These are personal tax, capital gains tax and business tax.
For personal tax the expectations are:
- Individuals born after 5 April 1948 will be entitled to a personal tax allowance of £10,000.
- Employees will be able to increase the maximum value of shares acquired under Share Incentive Plans (SIP) and Save As You Earn (SAYE) schemes. The increased limits will be: SIPs – £3,600 on the free shares that can be awarded to employees and £1,800 on the partnership shares employees can purchase; SAYE – the monthly amount that employees can save will be increased to £500.
- The annual exemption limit for employer-related loans, to be treated as earnings, will be increased from £5,000 to £10,000.
For capital gains tax the expectations are:
- The annual exempt amount to be increased to £11,000.
- The rule that exempts the final 36 months of ownership of a private residence from CGT is to be reduced to 18 months. The 36 months will still apply if the owner is disabled or moved into a care home.
For business tax the expectations are:
- HMRC is introducing new legislation affecting Limited Liability Partnerships. Members of LLPs who satisfy the new criteria as “salaried members” will effectively lose their self-employed status and be taxed under the PAYE legislation.
- There will also be restrictions on the way in which mixed partnerships, those with individual and typically corporate members, allocate profits and losses.
We know more about what is expected in the 2014 budget. For more information go to: https://www.accountancylive.com/autumn-statement-2013-summary
One of the most significant changes comes to National Insurance contributions. The changes promised in last year’s budget come into effect this April:
- Almost every employer who is a business or charity that pays Class 1 NICs on their employee’s or directors earnings is eligible. The Allowance could reduce your contribution by up to £2,000. To check eligibility go to www.gov.uk/employment-allowance for more info. This rolls out on the 6th April 2014 – we waited a year for it so don’t delay and make sure you benefit from day one!
This budget proposes another concession for employee’s under the age of 21:
- From 6 April 2015 employers will no longer be required to pay Class 1 secondary NICs on earnings paid up to the Upper Earnings Limit (UEL) to any employee under the age of 21.
It is another year of waiting but yet another nice reduction in National Insurance contributions.
What we do not know is what surprises there will be in the 2014 Budget. There will be live updates on our social media and significant points posted here throughout the speech on the 19th March. Once again we await a lengthy speech, some disappointment, some broken promises, some kept, and hope for the outcome to be good for business above all else!