Autumn Statement 2013: the UK Government's Plans for the Economy

Update from Nair & Co. International Tax Team (Bristol, UK) - The UK’s Chancellor of the Exchequer recently presented the Autumn Statement to Parliament. A majority of the provisions outlined in the Statement will be effective starting 2014. Among them, new individual tax regulations, incentives for employee training and extension of the small business rate relief. Highlights are listed below: Pertaining to individuals    An increase in personal allowance to £10,000 for any taxpayer born after 5 April 1948. The basic tax rate limit is fixed at £31,865. A 40% tax will apply to income exceeding the rate limit; further, income exceeding £150,000 will be taxed at 45%. Spouses and civil partners will be allowed to transfer up to £1,000 of personal allowance between each other from 2015-16. This would mainly be relevant in the tax year when a partner has partially used personal allowance and the measure could provide a benefit of up to £200 for eligible couples in 2015-16.

Pertaining to corporations  Corporate tax provisions can be expected that would make it easier to obtain relief for corporation tax trading losses when a change of ownership occurs.

Pertaining to the workplace (employees and employers)  New legislation regarding company automobiles will soon be introduced, the same would ensure that employees’ personal use of company cars will be taxed in the relevant tax year. Employer provided leased car benefits would be taxed as a car benefit. Employers may obtain government funding for apprentice training costs. Proposed for April 2015, employers will no longer be required to pay Class 1 secondary National Insurance Contributions (NICs) on remuneration of up to £813 per week to employees under 21 years of age. Steps will be taken to prevent employers and employment mediators from avoiding employer NICs and obligations. Changes to Share Incentive Plans (SIP) include increase in the individual limits on "free shares" (shares that a company may award to an employee under the SIP rules) by 20 percent to £3,600 from £3,000 and "partnership shares" (shares that the employee may purchase) also by 20 percent to £1,800 from £1,500, or 10% of the employee's salary. Save as You Earn (SAYE) schemes have increased the maximum monthly amount that an employee may save towards purchase of shares to £500 from £250.

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Other legislation  Main anti avoidance measures include:  Amendments to the worldwide debt cap provisions.  Changes to the Controlled Foreign Company (CFC) regime.  Measures targeting avoidance schemes based on the exploitation of the double tax relief rules. Concerning property related taxation, extension of the small business rate relief by one year with a maximum of 2 percent cap on the annual increase in business rates.

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