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Budget 2012. Other matters Capital taxes Employment tax 2 Business tax Investment relief Personal Tax.

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Presentation on theme: "Budget 2012. Other matters Capital taxes Employment tax 2 Business tax Investment relief Personal Tax."— Presentation transcript:

1 Budget 2012

2 Other matters Capital taxes Employment tax 2 Business tax Investment relief Personal Tax

3 Personal tax 3

4 2011/12 Personal allowance under 65 yrs£7,475* Personal allowance 65 – 74 yrs£9,940** Personal allowance over 75 yrs£10,090** *Reduced by £1 for every £2 adjusted net income exceeds £100,000 ** Reduced by £1 for every £2 adjusted net income exceeds £24,000 ALLOWANCES

5 2011/122012/13 Personal allowance under 65 yrs£7,475*£8,105* Personal allowance 65 – 74 yrs£9,940**£10,500*** Personal allowance over 75 yrs£10,090**£10,660*** *Reduced by £1 for every £2 adjusted net income exceeds £100,000 ** Reduced by £1 for every £2 adjusted net income exceeds £24,000 *** Reduced by £1 for every £2 adjusted net income exceeds £25,400 ALLOWANCES

6 Higher rate threshold £126 £42,475

7 2011/122012/13 Basic rate20%35,00020%34,370 Higher rate40%115,00040%115,630 Additional rate50%Over 150,000 50%Over £150,000 TAX RATES

8 Tax as % Income 8

9 2013/14 Personal allowance born after 5 April 1948£9,205* Personal allowance born between 6 April 1938 and 5 April 1948 £10,500 Personal allowance born before 6 April 1938£10,660 *Reduced by £1 for every £2 adjusted net income exceeds £100,000 ALLOWANCES 2013/14

10 Age related allowances To be frozen at 2012/13 levels Entitlement – 65+ only for those born before 6 April 1948 – 75+ only for those born before 6 April 1938 Income limits increased to £100,000 Once basic PA reaches same level – Extra allowance will disappear 10

11 2012/132013/14 Basic rate20%£34,37020%£32,245 Higher rate40%£115,63040%£117,755 Additional rate50%Over 150,000 45%Over £150,000 TAX RATES 2013/14

12 Tax as % Income 12

13 Other issues Dividend rate for additional income – 37.5% – Effective rate 30.6% on net dividend Trust rate – 45% 13

14 Child benefit charge Tax charge from 7 Jan 2013 Adjusted net income > £50,000 – Recipient of child benefit – Partner of child benefit recipient Charge – 1% of benefit per £100 of ANI over £50,000 – At £60,000 ANI full benefit charged 14

15 Example 15

16 Partnership Married couple living together Civil partners living together Man and woman living together not married Couple living together as if civil partners 16

17 Cap on reliefs Will apply to reliefs which have no cap – Loss relief – Charitable giving Relief above £50,000 Limited to greater of – 25% of income – £50,000 Consultation on impact on charitable giving 17

18 ISAs 2011/122012/13 Maximum investment £10,680£11,280 Cash maximum £5,340£5,640 18

19 Statutory Residence Test Clear tests Harder to break away from UK Applies for individuals Covers direct taxes – Not NIC Will supersede all existing law and guidance Applies from April 2013

20 Ordinary Residence Relevant for – Employment income – Remittance basis – CGT To be abolished from

21 Remittance basis charge 7 out of 9 years resident – £30, out of 14 years resident – £50,000 Individuals born in UK – Will hit £50,000 charge at 18

22 Remittances – qualifying investment Exempt remittance for investment Formal claim required Investment in a company – Shares direct – eligible trading company – Loan direct – Shares in stakeholder company No limits

23 Eligible trading company Unquoted Carrying on commercial trade – Preparing to trade within 2 yrs Trade – Includes commercial property – Some residential property situations Substantial requirement – 80%+

24 Benefit restriction Widely drawn Anything not provided in course of trade Anything provided on favourable terms Can have a commercial salary, dividend etc

25 Reinstatement of remittance Potentially chargeable event Without appropriate mitigation steps Treat original investment as remittance At end of period of grace

26 Business tax 26

27 FYMain rateSmall Company 1 April %20% 1 April %20% 1 April %20% 1 April %20% CT rates Plan A

28 FYMain rateSmall Company 1 April %20% 1 April %20% 1 April %20% 1 April %20% CT rates Plan B

29 29 InvestmentRelief

30 EIS changes Relief increased from 6 April 2012 – £1m investment Connection with company – Removal of loans as a factor Inclusion of some preference shares – Rights must not be determined by company or investor Minimum investment level removed

31 EIS and VCT changes Some tightening of avoidance rules – Acquisition of existing business – Not acquisition of shares as a trade Subsidised generation of electricity not qualifying Increase in size of company that qualifies – £15m gross assets Increase in investment into company – £5m

32 SEED ENTERPRISE INVESTMENT SCHEME

33 SEIS headlines Income tax relief at 50% – Max investment £100,000 CGT exemption – Gains made in 2012/13 – Reinvested in SEIS Company assets < £200,000 Max investment in company £150,000 Mass of anti-avoidance!!

34 Income tax relief Given as a reduction of tax liability Cannot create a repayment – Max relief = actual tax liability Unused relief – Carry back to PY – BUT not 2012/13 to 2011/12

35 CGT relief 2012/13 only Assets sold – Reinvested in SEIS Reduce gain by SEIS investment If SEIS withdrawn – CGT charge reinstated

36 Capital allowances from April 2012 Annual Investment Allowance – Down to £25,000 – Time apportion – Watch the period post April Writing down allowances – 20% down to 18% – 10% down to 8% – Hybrid rates

37 Cars 100% FYA on low emission cars To be extended to 31 March 2015 Qualifying emissions to be reduced in 2013 – 95gm/km 37

38 Cars – writing down allowance Current 20% wda – Emissions 111 – 160 gm/km From April 2013 – Emissions 96 – 130 gm/km All other vehicles – 10% (8%) wda 38

39 First Year Allowance ‘designated assisted areas’ in Enterprise Zones 100% Plant From 1 April 2012 – For 5 years Meets 5 conditions Watch exclusions

40 5 conditions 1.Company within CT 2.For purpose of trade 3.New activity 4.New 5.Not replacement

41 Fixtures Asset installed in a building which becomes part of building CAs go to person incurring expenditure Building transferred – Fixture transferred – CAs for purchaser must not exceed disposal value of vendor

42 New rules Current owner acquires fixtures from another person Other person treated as owner – Incurred historic expenditure Past owner entitled to claim CAs Requirements for purchaser to get CAs

43 R&D changes April 2011 – Credit rises to 100% (200% total) April 2012 – Credit rises to 125% (225% in total) – £10,000 min spend removed – PAYE limit removed

44 Patent Box Intellectual Property – 10% tax rate – 10% rate of corporation tax 44

45 Creative sector New reliefs to be introduced – No details yet Aimed at – Video games – Animation – High end TV programmes ‘Wallace and Gromit’ relief! 45

46 Issues for small businesses Unincorporated businesses Turnover up to VAT threshold – Continue up to £150,000 From 2013 Use cash basis rather than full accounting – Reduce record keeping Some standard expenses – Motoring – Use of home 46

47 Other issues Make disincorporation easier Integration of tax and NIC Improving HMRC service Introducing online Business Dashboard 47

48 48

49 49 Employment tax

50 Car benefits Cars – Changes announced for future years – Increased percentages – Diesel supplement of 3% will not apply from April

51 Car benefits 2012/13 No CO2 emissions0% 75gms/km or less5% 99gms/km or less10% 100gms/km11% Then every 5gms/km+1% to 35%

52 Car benefits 2013/14 No CO2 emissions0% 75gms/km or less5% 94gms/km or less10% 95gms/km11% Then every 5gms/km+1% to 35%

53 Car benefits 2014/15 No CO2 emissions0% 75gms/km or less5% 94gms/km or less11% 95gms/km12% Then every 5gms/km+1% to 35%

54 Car benefits 2015/16 No CO2 emissions13% 75gms/km or less13% 94gms/km or less13% 95gms/km14% Then every 5gms/km+1% to 37%

55 Fuel benefits Cars – 2012/13 multiplier increased to £20,200 – 2013/14 increase by RPI + 2% Vans – 2012/13 unchanged at £550 – 2013/14 increased by RPI 55

56 Time Real Information R T I

57 What is RTI? Information about payroll and deductions passed to HMRC when payroll run Part of Bacs transmission Ultimate aim is Centralised Deductions – HMRC do the work!

58 Timetable April 2012 – Volunteer employers start RTI April 2013 – All employers start Oct 2013 – All employers will be using RTI

59 Core process Payday – Details of net pay to employee – Background details to HMRC Monthly – Pay tax to HMRC – Provide other relevant information Employee leaves – Notify HMRC via RTI

60 Core process Employer issues – Monthly payslips – P60 – Details to leavers Year end – No P35 – No P14 – No P38A

61 Personal Service Companies Tighten up IR 35 procedures – Package of legal changes – Strengthen compliance teams in HMRC Consultation on use of service companies by office holders and controlling individuals – Integral to running of organisation – PAYE and NIC deducted 61

62 Enterprise Management Incentive Tax advantaged shares scheme – Target employees Limit of shares – Current £120,000 – Increase to £250,000 Consult on – Make gains subject to 10% CGT only – Extend access for academics 62

63 Capital taxes 63

64 CGT Annual exemption frozen for 2012/13 – £10,600 Rates unchanged – 18% if any basic rate band available – 28% otherwise unless – 10% for Entrepreneurs’ Relief gains up to £10m

65 Foreign currency bank accounts Present position – No problem if for private expenditure abroad – CGT issues if purchasing overseas assets From 6 April 2012 – All exempt from CGT

66 IHT Nil rate band frozen until April 2015 – £325,000 Consulting on – Periodic charge in trusts – Spouse exemption for domiciled spouse transferring to non-dom spouse 66

67 IHT and charitable bequests Basic principle – Liability on estate at 36% Provided minimum level of charitable bequests – 10% of baseline amount

68 Other matters 68

69 VAT Registration threshold increased to £77,000 Removal of loopholes and anomalies to bring in standard rate liability – Approved alterations to listed buildings – Self-storage arrangements – Hot food and sports drinks – Rental of hairdressers’ chairs – Holiday caravans 69

70 SDLT Zero band to £250,000 for first time buyers – Ends 24 March 2012 Residential property over £2m – Currently 5% – Increased to 7% from 22 March – Unless contract entered into before that date 70

71 71

72 Dealing with avoidance Non-natural person is purchaser – Company SDLT 15% if price over £2m – Effective from Budget Day Further consultation – Annual charge – CGT charge if non resident 72

73 GAAR General Anti Abuse Rule Detailed report prepared in 2011 Consulting on detail Primarily aimed at abusive schemes 73

74 Budget 2012 Thank you


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