UK Budget 2013 Corporate Tax Rate to Reduce as per Schedule, Increase in VAT Thresholds, Changes to NICs: Nair &

; Co.
(Sunnyvale, CA)- Some of the significant highlights of the UK Budget 2013 (presented by Chancellor George Osborne) are discussed below Reduction in Corporate Tax Rate; Unification of the Small Profits Rate UK plans to make its tax system most competitive in the G20 by reducing the main rate of corporation tax by an additional 1% in April 2015, so it reaches 20%. In the process, the Government will unify the small profits rate and the main rate so there is a single rate of corporation tax, simplifying the tax system. The corporate tax rates will be 23% from April 2013 and 21% from April 2014 and 20% from April 2015.
Corporation Tax Rates for Financial Years Starting on April 1 Years Small Profits Rate Main rate of Corporation Tax 2012 20% 24% 2013 20% 23% 2014 20% 21% 2015 20% 20%

The Government will introduce an allowance of 2,000 per year for all businesses and charities to be offset against their employer National Insurance contributions (NICs) bill from April 2014. Other Significant Changes Corporate Tax The Government will introduce a new Above the Line (ATL) credit for R&D investment of large companies from April 2013 (As announced in Autumn Statement 2011). 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. The headline rate of the ATL credit will be 10%, which is increased from the 9.1%proposed in Budget 2012. Companies with no corporation tax liability will be able to claim a payable credit. The introduction of the ATL credit follows an increase in the rate of the small and medium-sized enterprises (SMEs) R&D tax credit from 175% to 225%in Budget 2011, which continues to provide targeted support for early-stage companies and start-ups investing in R&D in the UK. The Seed Enterprise Investment Scheme, launched in Budget 2012, offers 50% income tax relief on investments made into small, early-stage companies. The Government has decided to provide a limited extension of the capital gains tax holiday to continue to encourage investors to take up the new scheme. Any investors making capital gains in 2013-14 will receive a 50% capital gains tax relief when they reinvest those gains into seed companies in either 2013-14 or 2014-15.

The Government will strengthen obligations to ensure the correct income tax and NICs are paid by offshore employment intermediaries. Annual Investment Allowance (AIA) As announced in Autumn Statement 2012, the Government will increase the AIA limit from 25,000 to 250,000 for two years for all qualifying investments in plant and machinery made on or after January 1, 2013. Corporation tax deductions for employee share acquisitions - Existing legislation has been amended to clarify a companys entitlement to corporation tax deductions for accounting expenses in connection with share options or awards granted to employees. This measure will take effect since March 20, 2013. Changes to the Individual Tax Regime Income tax rates The basic and higher rates of income tax for 2013-14 will remain at their 2012-13 levels. The additional rate of income tax will be reduced from 50% to 45% from 2013-14 (applicable to income over 150,000). UK makes the first 10,000 of income free from income tax (a year ahead of schedule) The personal allowance will be increased by 560 to 10,000 from April 2014. The income tax personal allowance will increase by 1,335 to 9,440 in April 2013. From April 2013, the basic rate limit will be 32,010. The National Insurance upper earnings/profits limit will also be reduced to align it with the higher rate threshold. Thus, the effective tax rates will be Income Tax rates and taxable bands Rate Personal Allowance Basic Rate: 20% Higher Rate: 40% Additional Rate: 50% 45% from April 6, 2013 2012-13 8,105 0 - 34,370 34,371 150,000 Over 150,000 N/A 2013-14 9,440 0 - 32,010 32,011 -150,000 N/A Over 150,000 2014-15 10.000 0 - 31,865 31,865- 150,000 N/A Over 150,000

The UK to introduce a new Tax-Free Childcare Scheme. The Government will support working families with 20% of their childcare costs up to 1,200 per child per year. This new system will be phased in from autumn 2015. The Government will introduce a new employee shareholder status that will give staff a stake in their firms future success and give firms greater choice about the contracts they can offer to individuals. Employee shareholders will have different employee rights and shares worth a minimum of 2,000 in the firm they work for. The UK will exempt gains on up to 50,000 of shares acquired by employee shareholders from capital gains tax. The first 2,000 of share value that anyone receives under the new status will be free from income tax and NICs.

Residence As announced on December 6, 2011, the Government will introduce a statutory definition of tax residence and abolish ordinary residence for most tax purposes from April 6, 2013. Overseas workday relief will be made available to any non-domiciled individual who arrives in the UK following a period where they have been non-resident for at least three tax years. Taxation of Limited Liability Partnerships (LLPs) The UK may (under consultation) remove the presumption of self-employment for LLP partners, to tackle the disguising of employment relationships through LLPs and counter the artificial allocation of profits to partners (in both LLPs and other partnerships) to achieve a tax advantage. VAT From April 1, 2013, the VAT registration threshold will be increased from 77,000 to 79,000 and the deregistration threshold from 75,000 to 77,000. The Government will legislate to change the rules for the taxation of intra-EU business to consumer supplies of telecommunications, broadcasting and e-services. From January 1, 2015, these services will be taxed in the member state in which the consumer is located, ensuring these are taxed fairly which will help to protect the revenue. To support these changes, the Government will also legislate for the introduction of a Mini One Stop Shop from January 1, 2015. This will give businesses the option of regi stering in just the UK and accounting for VAT due in other member states using a single return. For more information on this topic email media@nair-co.com Subscribe to regular global tax compliance alerts from Nair & Co. About Nair & Co. Nair & Co. provides you with your one touch outsourced finance, HR, legal and global tax compliance department for your international operations. If you are expanding abroad for the first time or increasing your global footprint, our turnkey solutions help you do so with minimal risk, stress and cost. We support 4000+ client operations in over 56 countries and have core offices in U.K., India, China, U.S., Japan and Singapore. Nair & Co. was named among the top 100 outsourcing services providers in the world by the International Association of Outsourcing Professionals (IAOP). Learn more at www.nair-co.com Get the latest press releases and updates on international tax, HR, Finance, compliance and other legal news at Nair & Co. Industry Alerts. Know more on: International payroll services International Business Services international business expansion