Budget 2014 – summary for small business owners

As announced by George Osborne today:

Corporation tax

  • Rate stays at 20% for annual profits up to £300k
  • Annual investment allowance doubles to £500k from April 2014

Personal tax

  • Personal allowance of £10,000 for 2014/15 and £10,500 for 2015/16
  • Basic rate of 20% applies to the next £31,865 and £31,785 respectively
  • Higher rate of 40% on further income up to £150,000
  • Additional rate of 45% thereafter
  • From 2015/16, married couples can transfer up to 10% of their personal allowance if neither of them are higher rate tax payers

National Insurance (from April 2014)

  • 12% NIC for employees on earnings between £153 and £805 per week
  • 2% NIC on any additional earnings
  • 13.8% NIC for employers on earnings in excess of £153 per week (no upper limit)
  • The first £2,000 due per year for employers NIC is effectively exempt so does not have to be paid
  • 9% Class 4 NIC for the self-employed on annual profits of £7,956 to £41,865
  • 2% Class 4 NIC on any additional profits
  • Class 2 NIC for the self-employed (£2.75 per week) will be collected via Self Assessment from 2016/17

VAT

  • Registration threshold increases to £81,000 from April 2014

Pensions (from April 2014)

  • Lifetime allowance is cut to £1.25m
  • Annual investment limit is reduced to £40k

Savings (from July 2014)

  • ISA limit raised to £15,000 for both cash and share investments
  • Junior ISA limit increases to £4,000

Capital gains

  • Annual exemption increases to £11,000 from April 2014
  • Rates stay at 10%/18%/28%

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