Archive for the 'Budget March 2013' Category

Small businesses and cash accounting – Budget 20 March 2013

Eligible small businesses (generally those with receipts not exceeding the VAT

registration threshold) will be able to use a simple method to work out their

taxable profits. The simple method is based on money-in money-out recording

(the ‘cash basis’), rather than accounts prepared on an accruals basis.

Businesses using the simple method will not have to make year-end accounting

adjustments and other calculations primarily designed for larger or more

complex businesses. They will not have to compute figures of debtors, creditors

and stock, or generally distinguish between ‘capital’ and ‘revenue’ expenditure.

Unincorporated businesses will also be able to use simplified flat rates to calculate

certain business expenses.

The measures will apply for the tax year 2013-14 and onwards.

Back to Main Page – Budget 20 March 2013

Disincorporation relief – Budget 20 March 2013

A relief for disincorporation will be introduced for five years from April 2013.

The relief will allow a company to transfer goodwill and an interest in land to its

shareholders so that no corporation tax charge arises on the company on the

transfer. The relief will be available to businesses with total qualifying assets not

exceeding £100,000.

Many small firms may see themselves trapped inside a corporate structure,

a leftover from the heady days of 0% and 10% corporation tax rates. Small

companies and their shareholders can choose to disincorporate and to transfer

the business and its assets as a going concern to one or more of the company’s

shareholders, to continue the business in an unincorporated form.

The measure will make it easier for the owners of a small incorporated business

todisincorporate by removing some of the tax charges that arise when assets

are transferred by the company to the shareholders who wish to continue the

business in an unincorporated form. The measure will allow the business the

flexibility to choose the most appropriate legal structure in which to operate,

which has been restricted by a number of tax charges and administrative issues

that might currently discourage disincorporation.

For disincorporations on and after 1 April 2013 but before 31 March 2018 a joint

claim needs to be made by the company and its shareholders to allow qualifying

business assets (goodwill and land and buildings used in the business) to transfer

at a reduced value for CT and capital gains tax purposes. The joint claim will allow

the asset to be transferred at the reduced value so that no CT will be payable by

the company on the transfer of the qualifying business assets.

Claims will be restricted to those businesses where the market value of the

classes of assets allowed for disincorporation relief does not exceed £100,000.

Joint claims must be made to HM Revenue & Customs (HMRC) within two years

of the date of the transfer of business assets.

Back to Main Page – Budget 20 March 2013

Employer provided benefits in kind: beneficial loans – Budget 20 March 2013

Legislation will be introduced to increase the exempt threshold for the small

loans exemption limit from £5,000 to £10,000 for 2014-15 and subsequent tax

years. As long as the total outstanding balances on all such loans do not exceed

the threshold at any time in a tax year, there is no tax charge.

A negligible number of individuals in the UK will be affected by this change,

however for those affected it will mean a substantial reduction in administration

time if this is the only benefit in kind to be reported.

Back to Main Page – Budget 20 March 2013

Help to buy scheme – Budget 20 March 2013

With a substantial boost for new home builders with the ‘Help to buy’ scheme,

all our clients in house building and associated trades will no doubt feel a little

more confident of the support for their industry and if you are looking to move

home there will be substantially more help with the deposit loan.

The government will provide an equity loan worth up to 20 per cent of the value

of a new build home, repayable once the home is sold, and will significantly widen

the eligibility criteria to ensure as many people as possible are able to benefit,

including increasing the maximum home value to £600,000 and removing the

income cap constraint.

Back to Main Page – Budget 20 March 2013

Research and development (R&D) incentives – Budget 20 March 2013

R&D tax credits are a valuable incentive which recognises the importance of

business investment in new ideas and technologies. The new credit for large

company R&D investment will commence from April 2013.

The ATL credit is designed to make R&D relief more visible to those making

investment decisions and provide greater cash flow support to companies with no corporation tax liability.

Back to Main Page – Budget 20 March 2013

The main rate of Corporation Tax (CT) will fall to 20% on 1 April 2015 – Budget 20 March 2013

The process unifies the small profits rate and the main rate so there is a single

rate of corporation tax, simplifying the tax system and making the UK rate lower

than the US, Japan, France and Germany.

Back to Main Page – Budget 20 March 2013

Stamp duty abolished for shares listed on the growth stock markets – Budget 20 March 2013

From April 2014, Stamp Duty has been abolished for the shares of companies

listed on growth markets including the Alternative Investment Market (AIM) and

the ISDX Growth Market. This will directly benefit hundreds of smaller quoted UK

firms, lowering their cost of capital investment. It is hoped to encourage more

equity investment in small companies.

Back to Main Page – Budget 20 March 2013

Inheritance Tax – Budget 20 March 2013

Inheritance Tax (IHT): nil-rate band

The IHT nil-rate band has been frozen at £325,000 until 2017-18.

Inheritance Tax for non-domiciled spouses

Should a spouse or civil partner be domiciled outside the UK, from 6 April 2013

they can elect to be treated as domiciled in the UK for the purposes of Inheritance

Tax (IHT).

The IHT exempt amount for life time transfers from a UK-domiciled individual to

their non-UK domiciled spouse or civil partner is at present capped at a life time

limit of £55,000. However, this appears to have fallen foul of the EU regulations

and so the changes will mean that rules are equalised between domiciled and

non-domiciled spouses and civil partners. The IHT nil-rate band which currently

stands at £325,000 will become the upper limit for transfer.

Back to Main Page – Budget 20 March 2013

Capital Gains Tax (CGT): annual exempt amount (AEA) – Budget 20 March 2013

The AEA will increase by 1 per cent in 2014-15 and 2015-16. The AEA will rise

to £11,000 in April 2014 and £11,100 in April 2015. The rate of charge to CGT

remains at 18% or 28% depending on your level of income. If the asset disposed

of is a business asset then the rate of CGT may fall to 10%.

Back to Main Page – Budget 20 March 2013

Extension of the Capital Gains Tax holiday on Seed Enterprise Investments – Budget 20 March 2013

The Seed Enterprise Investment Scheme was launched in 2012 and gives a 50%

income tax relief on investments made into small, start up and fledgling (Seed)

companies. The Budget announced a limited extension of the Capital Gains Tax

(CGT) holiday to continue to encourage investors to take up the new scheme.

Any investors making capital gains in 2013-14 will receive a 50% CGT relief when

they reinvest those gains into Seed companies in either 2013-14 or 2014-15.

Back to Main Page – Budget 20 March 2013




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