Budget 2013

 

The main announcements for all corporate and business  taxes, are shown below.

Main Announcements

1. Corporation Tax Rate Reduction

Legislation will be introduced in Finance Bill 2013 to reduce the main rate of corporation tax for non ring fence profits to:

• 21 per cent for the financial year commencing 1 April 2014; and,

• 20 per cent for the financial year commencing 1 April 2015.

Finance Bill 2013 also sets the small profit rate at 20 per cent for the financial year commencing 1 April 2013. Finance Bill 2013 will also set the marginal rate fraction and rate for ring fenced profits.

2.National Insurance: £2,000 employment allowance

The Government will introduce an allowance of £2,000 per year for all businesses and charities to be offset against their employer Class 1 secondary NICs liability from April 2014. The allowance will be claimed as part of the normal payroll process through RTI. The Government will engage with stakeholders on the implementation of the measure after the Budget and is seeking to introduce legislation later in the year.

3. Annual tax on enveloped dwellings

As announced in Budget 2012, legislation will be introduced in Finance Bill 2013 for an annual tax to be payable by certain non-natural persons that own interests in dwellings valued at more than £2 million. Following consultation on draft legislation, changes have been made to introduce additional reliefs, modify conditions for some of the reliefs, and the requirements to make returns if companies cease to be eligible for relief or become liable to an increased charge. The changes also introduce rules for alternative finance arrangements; provide exemptions for charities and certain others; and rules for claims, appeals, information powers and penalties. The tax will come into effect on 1 April 2013.

 

4. CGT: extension to certain non-natural persons disposing of UK residential property valued at over £2 million

Legislation will be in Finance Bill 2013 to introduce a CGT charge payable by certain non-natural persons when they dispose of interests in high value residential property in the UK on or after 6 April 2013. Broadly, the new tax charge will be payable by these non-natural persons, wherever they are resident, if they were liable to the new annual tax on enveloped dwellings on the property in question. CGT will normally be payable only on gains attributable to periods of ownership after 5 April 2013. However, it will be possible to elect for gains or allowable losses to be computed for CGT purposes by reference to the entire period of ownership. The tax will be charged at 28 per cent.

5. Tax simplification for small businesses

As announced in Budget 2012, legislation will be introduced in Finance Bill 2013 to allow two simpler income tax schemes for small unincorporated businesses. Following consultation, the legislation has been revised to:

• keep the cash basis optional but limit the circumstances under which a business can leave it; and,

• provide for an adjustment on a just and reasonable basis where an individual takes business goods for own use and not require businesses to align reporting with the tax year.

These changes will have effect from the 2013-14 tax year

6. NICs: process simplification for the self-employed

The Government will consult on options to simplify the administrative process for the self-employed by using Self Assessment to collect Class 2 NICs alongside income tax and Class 4 NICs. Following consultation, the Government will decide whether to make changes to the way Class 2 NICs is collected and plans for legislative change if required will follow.

7. Seed enterprise investment scheme (SEIS): reinvestment relief

Legislation will be introduced in Finance Bill 2013 to:

• extend the capital gains tax (CGT) relief for reinvesting gains in SEIS shares to gains accruing in 2013-14 when those gains are reinvested during 2013-14 or 2014-15

• to prevent a company from being disqualified from SEIS where it was established by a corporate formation agent before sale to its ultimate owners

8. Corporation tax deductions for employee share acquisitions

Legislation will be introduced in Finance Bill 2013 to clarify the rules that determine the availability of corporation tax deductions in connection with share options or awards granted to employees. This legislation will have effect from 20 March 2013 in relation to company accounting periods ending on or after that date.

Corporation tax deductions for employee share acquisitions

9. Review of Partnerships

The Office of Tax Simplification will carry out a review of ways to simplify the taxation of partnerships. The OTS will carry out an initial scoping exercise to identify which areas most complex for taxpayers and will provide more details in due course.

10. Capital allowances: low emission vehicles

Legislation will be introduced in Finance Bill 2015 to extend the 100 per cent allowance (FYA) for expenditure incurred on cars with low carbon dioxide emissions and electrically propelled cars for an additional three years to 31 March 2018.

11. Corporation Tax: deferral of payment of exit tax

From 11 December 2012, companies can apply for an exit charge payment          plan to defer payment of that part of their corporation tax bills which          relates to exit charges where the statutory date for payment of that          tax under section 59D TMA 1970 has not already passed. This means          that where a company has migrated from the UK on or after 11 March          2012, any tax related to exit charges for its final accounting period          can be deferred. Whilst the application for deferral must generally          be made within 9 months of the end of the accounting period for which          the charges arise, companies have until 31 March 2013 to apply for          deferral where that time limit falls between 11 December 2012 and 31          March 2013, in order to allow them time to make the necessary application.