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

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

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Published by Yvonne Smith
Nair & Co., the leader in international expansion services tells you the significant highlights of the UK Budget 2013 (presented by Chancellor George Osborne).
Nair & Co., the leader in international expansion services tells you the significant highlights of the UK Budget 2013 (presented by Chancellor George Osborne).

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Categories:Types, Business/Law
Published by: Yvonne Smith on Mar 29, 2013
Copyright:Attribution Non-commercial

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05/14/2014

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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 GeorgeOsborne) 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 taxby 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 rateof 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
 
2012
 
2013
 
2014
 
2015
 Small Profits Rate 20% 20% 20% 20%Main rate of CorporationTax24% 23% 21% 20%
The Government will introduce an allowance of £2,000 per year for all businesses and charities to beoffset 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 companiesfrom 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 andprovide 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 Budget2012. Companies with no corporation tax liability will be able to claim a payable credit. The introductionof the ATL credit follows an increase in the rate of the small and medium-sized enterprises (SMEs) R&Dtax credit from 175% to 225%in Budget 2011, which continues to provide targeted support for early-stagecompanies and start-ups investing in R&D in the UK.The Seed Enterprise Investment Scheme, launched in Budget 2012, offers 50% income tax relief oninvestments made into small, early-stage companies.
 
The Government has decided to provide a limited extension of the capital gains tax holiday to continue toencourage 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 reinvestthose 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 byoffshore employment intermediaries.
Annual Investment Allowance (AIA)
 
 –
As announced in Autumn Statement 2012, the Government willincrease the AIA limit from £25,000 to £250,000 for two years for all qualifying investments in plant andmachinery made on or after January 1, 2013.
Corporation tax deductions for employee share acquisitions
- Existing legislation has been amended to
clarify a company’s entitleme
nt to corporation tax deductions for accounting expenses in connection withshare 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 2012-13levels. The additional rate of income tax will be reduced from 50% to 45% from 2013-14 (applicable toincome 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 limitwill 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
 
2012-13
 
2013-14
 
2014-15
 Personal Allowance £8,105 £9,440 £10.000Basic Rate: 20% £0 - £34,370 £0 - £32,010 £0 - £31,865Higher Rate: 40% £34,371
 –
£150,000 £32,011 -£150,000 £31,865- £150,000Additional Rate: 50% Over £150,000 N/A N/A45% from April 6, 2013 N/A Over £150,000 Over £150,000The 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 peryear.
 
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 thefirm they work for.
 
The UK will exempt gains on up to £50,000 of shares acquired by employee shareholders from capitalgains tax.
 
The first £2,000 of share value that anyone receives under the new status will be free from income taxand NICs.

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