Budget 2013 – new tax rates

Below is a summary, for small businesses, of the announcements made in today’s Budget.  Detailed tax rates and thresholds can be found on the HMRC website.

Individuals

  • Personal allowance is £9,440 for 2013/14 and £10,000 for 2014/15.
  • Basic income tax rate remains at 20%.
  • Higher rate tax (40%) is to apply on earnings over £41,450 from April 2013 and over £41,865 from April 2014.
  • Additional tax rate (paid on earnings in excess of £150,000) will reduce to 45% from April 2013.
  • For 2013/14, National Insurance kicks in for employees, at 12%, when they earn in excess of £149 per week, employers have to pay, at 13.8%, once wages exceed £148 per week and the self-employed pay 9% NI when earnings exceed £7,755 per annum.
  • The annual pension contribution allowance is to reduce from the current £50,000 to £40,000 from April 2014.
  • Annual capital gain exemption is to increase to £10,900 from April 2013.

Companies

  • Main company tax rate is to reduce to 23% from April 2013, 21% from April 2014 and 20% from April 2015.
  • Small company rate (where profits are below £300,000) is to remain at 20%.

VAT

  • Registration threshold to increase to £79,000 from April 2013.

Other

  • Annual investment allowance (tax relief for fixed assets) will increase substantialy from £25,000 to £250,000 from April 2013.
  • NIC holiday of up to £2,000 for small businesses taking on new employees.
  • ISA allowance increases to £11,520 from April 2013.
  • Inheritance tax threshold remains at £325,000.

The above is a brief summary of a 192 page Budget document.  If you suffer from insomnia, we recommend perusing the detailed Budget announcements.

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