The Chancellor of the Exchequer, George Osborne, delivered his 2013 budget on 20 March. There was lots of talk about deficit and debt, growth and GDP, but what I’m sure you want to know is…..how does it affect me?
One of the headline-grabbing announcements was the acceleration of the increase in personal allowance (tax free income allowance we all get) to £10,000 – this was originally planned to come in from April 2015 but it will now come in from April 2014 instead. The new allowance from next month is £9,440, up from £8,105 in the current year.
April 2014 also sees an introduction of an allowance of £2,000 for all businesses to use against their Employer’s National Insurance liability, which for small business will make a real difference.
The main rate of corporation tax has been falling since 2011 at 1-2% per year and from April 2015 it will be 20% – the same rate that small companies pay. We are hoping this means that the cumbersome “associated company” rules will therefore be scrapped as we will effectively have a flat rate of tax for companies.
Part of this year’s budget that was announced early was the increase in the Annual Investment Allowance from £25,000 to £250,000 for 2 years from January 2013 – this is the amount businesses can spend on plant & machinery (not cars) each year and get a deduction for the whole cost, in full, against their profit for the year. BE CAREFUL though if you are planning on investing in significant plant & machinery as the transitional rules are particularly complex! Please call us (0116 2423400) and we can advise you on the most tax efficient timing for your expenditure.
Our full overview of the budget can be found on our website click here.