Budget Update 2012

.-: as a- a a
David Bennett
22 March 2012
Budget Update
.-: as a- a a
ncome Tax
Top rate of tax income over 150,000
2011/12 - 50%
2012/13 - 50%
.-: as a- a a
2012/13 - 50%
2013/14 - 45%
2014/15 - ?
ncome Tax
Personal Allowance
2011/12 - 7,475
2012/13 - 8,105
2013/14 - 9,205
.-: as a- a a
2013/14 - 9,205
Higher Rate Threshold
2011/12 - 42,475
2012/13 - 42,475
2013/14 - 41,450
ncome Tax
Age Allowance Simplification
2011/12 - 9,940 (65-74) & 10,090 (75+)
2012/13 - 10,500 (65-74) & 10,660 (75+)
2013/14 Frozen
.-: as a- a a
2013/14 Frozen
2013/14 - Not available for those born after 5
April 1948
ncome Tax Rates & Thresholds
Rate 2011/12 2012/13
0% 0 - 7,475 0 - 8,105
20% 7,475 - 42,475 8,105 - 42,475
40% 42,475 - 100,000 42,475 - 100,000
.-: as a- a a
40% 42,475 - 100,000 42,475 - 100,000
60% 100,000 - 114,950 100,000 - 116,210
40% 114,950 - 150,000 116,210 - 150,000
50% 150,000+ 150,000+
Class 1 NC Rates & Thresholds
Rate of NIC 2011/12 2012/13
0% (Lower
Earnings Limit)
0 - 5,304 0 - 5,568
0% (Primary 5,305 - 7,225 5,569 - 7,592
.-: as a- a a
0% (Primary
Threshold)
5,305 - 7,225 5,569 - 7,592
12% 7,225 - 42,475 7,593 - 42,475
2% 42,475+ 42,475+
Deferment of dividends and bonuses
Receipts basis
Temporary loans pending top rate reduction
Benefit in kind charge
Overall saving 3%+ of gross
Tax Planning
.-: as a- a a
Overall saving 3%+ of gross
Anti Avoidance?
Child Benefit
Tapered withdrawal wef 2013/14
Income limits:
Up to 50,000 full child benefit
50,000 - 60,000 tapered
.-: as a- a a
50,000 - 60,000 tapered
60,000 no child benefit
Applies to higher earner (not household income)
Benefit payment unaffected withdrawal
operates through income tax charge
Maximum scale charge - % of list price
2012/13 2014/15 - increase by 1% (max 35%)
2015/16 2016/17 - increase by 2% (max 37%)
2016/17 3% diesel supplement removed
Fuel Charge
Car Benefits
.-: as a- a a
Fuel Charge
2012/13 - 20,200 x multiplier %
Corporation Tax
2011/12 2012/13 2013/14 2014/15
Small
Profits Rate
(up to
20% 20% 20% 20%
.-: as a- a a
(up to
300,000)
Main Rate
(above
1.5m)
26% 24% 23% 22%
Capital Allowances
2011/12 2012/13
Annual Investment
Allowance
100% 100%
AIA limit 100,000 25,000
Writing Down 20% 18%
.-: as a- a a
Writing Down
Allowances (plant
& machinery)
20% 18%
WDAs (integral
features & cars
over 160g/km)
10% 8%
Patent Box
From 2013
Lower rate of Corporation Tax 15.2% decreasing to
10% by 2017
.-: as a- a a
Profits from
Patent royalties & sale of patents
Profits from sale of items incorporating patent
Active ownership / development conditions
Capital Gains Tax
2011/12 2012/13
Annual Exemption 10,600 10,600
Standard Rate 18% 18%
.-: as a- a a
Standard Rate 18% 18%
Higher Rate 28% 28%
Entrepreneurs
Relief Rate
10% 10%
ER Limit 10m 10m
CGT and 8hare Options
Enterprise Management Incentives (EMI)
Entrepreneurs Relief on EMI shares acquired after 5
April 2012 10%
.-: as a- a a
New limit - 250k (currently 120k)
Consultation on share option schemes generally
expect new / simpler schemes in future?
8eed Enterprise nvestment
8cheme - Tax Relief for Business
Angels
50% Tax Relief on up to 100,000 investment in share
capital
EG 50,000 invested
50% tax relief = 25,000
Deducted from tax bill
.-: as a- a a
Deducted from tax bill
Capital Gains Tax Rollover
Permanent rollover on 2012/13 gains
Capital Gains Tax
Exemption on Sale of EIS Co
8eed E8 - Main Conditions
Newly incorporated company (<2 years at time of
investment)
Maximum Gross Assets of Company - 200k
Maximum Raised by Seed EIS - 150k
Maximum Investment by Individual - 100k
.-: as a- a a
Maximum Investment by Individual - 100k
Maximum Shareholding by EIS Investor 30%
Minimum shareholding period 3 years
8eed E8 - Main Conditions cont'd
Qualifying trade exclusions:
Farming
Leasing
Feed in Tariff Electricity Generation (except
hydro/anaerobic generation)
.-: as a- a a
hydro/anaerobic generation)
Property Investment
Hotels, Residential Care Homes
Banking / Financial Services
Legal & Accountancy
And many more
nheritance Tax
2011/12 2012/13
Nil Rate Band 325,000 325,000
Rate of IHT 40% 40%
.-: as a- a a
Rate of IHT 40% 40%
Reduced Rate n/a 36%
nheritance Tax - Reduced Rate
36% Rate on Estate instead of 40%
When you give 10% of net estate to charity
Net Estate =
.-: as a- a a
Net Estate =
Estate less
Amounts attracting Business Property Relief
Spouse Exemption
Nil Rate Band
nheritance Tax - Example
No Charitable
Legacy
With Charitable
Legacy
Estate (excl
business)
1,650,000 1,650,000
2 x Nil Rate Bands 650,000 650,000
.-: as a- a a
Net Estate 1,000,000 1,000,000
Charitable Legacy 100,000
IHT at 40% / 36% 400,000 324,000
Family receives 1,250,000 1,226,000
Residential Property
7% charge on 2m+
Residential Property purchased through companies
15% charge
8tamp Duty Land Tax
.-: as a- a a
15% charge
2m Threshold
Annual charge on 2m+ properties held in companies
2013/14
More detail to be announced
Anti-Avoidance
Stamp Duty Land Tax
Corporate Envelopes
Backdated legislation on future avoidance
General Anti-Avoidance Rule
Targeted at artificial and abusive tax avoidance
.-: as a- a a
Targeted at artificial and abusive tax avoidance
scheme
Consultation
Legislation from 5 April 2013
IR35 Personal Service Companies
Anti-Avoidance
Pension contributions to family members
Removal of tax & NIC advantages
From April 2013
.-: as a- a a
Cash basis for small unincorporated business
2013/14
Turnover under VAT threshold
Merger of operation of NIC & Income tax
Continue as separate taxes
Tax 8implification
.-: as a- a a
Continue as separate taxes
But operated consistently
VAT threshold 2012/13 - 77,000
Tax Relief on pension contributions unchanged
50k Cap on other tax reliefs detail to follow
Controlled Foreign Companies reform wef 5/4/12
Round up of the rest
.-: as a- a a
Controlled Foreign Companies reform wef 5/4/12
Personal tax statements How we spent it
Budget Update 2012
David Bennett
Tax Partner
.-: as a- a a
Tax Partner
Moore and Smalley
david.bennett@mooreandsmalley.co.uk
Moore and Smalley LLP is a limited liability partnership registered in England and Wales: No. OC313896.
Registered office: Richard House, 9 Winckley Square, Preston, Lancashire, PR1 3HP. The term "partner" indicates a member of Moore and
Smalley LLP who is not in partnership for the purposes of the Partnership Act 1890. A full list of members is available from our registered office.
Moore and Smalley are registered to carry on audit work by the Institute of Chartered Accountants in England and Wales and authorised and
regulated by the Financial Services Authority.