Budget 2013 – Summary for limited company owners

The Chancellor delivered some good news for small companies in today’s Budget, although his ability to announce any significant cheer to the UK’s firms was understandably limited by the dire state of the public finances.

The main changes announced today include a reduction in the main rate of Corporation Tax to 20% from April 2015, an increase in the personal tax allowance to £10,000 from April 2014, and a new ‘Employment Allowance’ to waive the first £2,000 of Employers’ NICs for small firms.

Budget 2013 – Headline Announcements

• Government borrowing is set to reach £114bn in 2013, with predicted falls in future years (how accurate these turn out to be remains to be seen).
• From April 2015, the main rate of Corporation Tax will be lowered to 20%, the same rate paid by small companies (with profits of £300k or less).
• The Bank Levy rate will be increased by 0.142% to offset this Corporation Tax reduction.
• The personal allowance (below which no income tax is payable) will rise to £10,000 from April 2014, although much of the tax revenues given up as a result of this measure will be recouped by a decrease in the higher rate tax threshold to £31,865.
• The Government is going to create an ‘Employment Allowance’, which will effectively provide small companies with a NIC refund of up to £2,000. An estimated 450,000 smaller firms are expected to pay no Employers’ NICs at all as a result.
• A wide range of pre-announced anti tax avoidance measures were confirmed, including a proposal to clamp down on offshore payroll companies who deprive the Treasury of National Insurance Contributions, further disclosure facilities with the Channel Islands, and the creation of a General Anti-Abuse Measure later in 2013. The promoters of tax avoidance schemes may also be ‘named and shamed’ in the future.
• The IR35 legislation will be extended to include ‘office holders’ within its scope, as previously announced.
• Tax-free childcare vouchers are to be introduced, worth up to £1,200 per child, per year.
• The new flat-rate pension (£144 per week) will now be introduced a year early, in 2016.
• A new ‘Help to Buy’ scheme will be introduced to help people buy their first properties. £3.5bn has been set aside to provide loans.
• A shameless ‘penny off a pint’ measure was also announced – beer duty will be reduced by 1p from Sunday.
• September’s planned fuel duty hike has been scrapped.

Budget 2013 Resources

For the full official Budget documentation, visit the HM Treasury site here.