Welcome to our Budget Insight
e-newsletter which highlights the recent issues that could be affecting you and/or your business, as well as technical updates to recent changes in tax legislation.

Many of the announcements had already been trailed in the 2012 Budget and Autumn Statement as well as multiple pre-Budget leaks. The following are some of the highlights:

The main rate of corporation tax will be reduced from 21% (which starts April 2014) to 20% from April 2015, establishing a single rate of tax for companies.  This will reduce the complexity caused by the associated companies rules.

Small and medium-sized businesses and charities will particularly benefit from the new employers’ national insurance contribution Employment Allowance from April 2014. Under this up to £2,000 of an employer’s NICs will be offset against their liability over the course of a year.

The personal allowance will be increased to £10,000 in 2014/15, earlier than previously expected.

There will be a new Above The Line tax credit of 10% for large company research and development expenditure from April 2013, as previously trailed in the Autumn Statement.  1 April 2013 is also the starting date for the new valuable Patent Box tax relief.

Stamp duty will be abolished for shares listed on exchanges such as AIM from April 2014.

A new capital gains tax relief will be introduced in the 2014 Finance Bill for the sale of a controlling interest in a business into an employee ownership structure.

Workers with employee shareholder status holding at least £2,000 of shares in their employer will have different employment rights from other employees. Gains on up to £50,000 worth of qualifying shares will be exempt from capital gains tax. Under the Budget proposals they will be able to receive up to £2,000 worth of shares free of income tax and national insurance contributions.

A new childcare scheme will be introduced, starting in Autumn 2015, for children under 5 and being extended over time to include children under 12.  For childcare costs of up to £6,000 per year per child, support will be available worth up to £1,200.  The scheme will be open to families with working parents not receiving support through the Childcare Element of Working Tax Credits/Universal Credit.  Those earning in excess of £150,000 will be excluded.

The CGT relief available for reinvesting gains in SEIS shares is being extended, albeit in a slightly watered down way.  Relief will be available for gains arising in 2013/14 that are reinvested during 2013/14 or 2014/15.  The relief will apply to half the qualifying re-invested amount.

A large number of specific anti-avoidance measures targeted particular arrangements; in addition there will be the new General Anti Abuse Rule (GAAR) planned to take effect during the course of this year.