Unincorporated businesses
Income tax
- basic personal allowance increases to £9,440 for 2013/14 (increases to £10,000 for 2014/15)
- basic rate band for income tax is £32,010 for 2013/14 (falls to £31,865 for 2014/15)
Cash accounting for taxable profits
- new optional cash basis for computing taxable profits for small unincorporated businesses (2013/14 tax year onwards
- small businesses can elect to be taxed on their cash receipts less cash payments of allowable expenses
- to qualify, receipts for the year must be less than the VAT registration threshold amount (£79,000 from 1 April 2013)
Flat rate expenses (applicable from 2013/14 onwards)
- for cars and vans a business mileage rate of 45p for the first 10,000 miles can be claimed; 25p thereafter
- for business use of home charge, a flat rate deduction based on the number of hours of business use per month can be claimed:
25 hours or more £10 51 hours or more £18 101 hours or more £26
General changes
VAT
- registration threshold increased from £77,000 to £79,000 on 1 April 2013 deregistration threshold increased from £75,000 to £77,000 fuel scale charges revised for periods beginning on or after 1 May 2013
Employers NI contributions
- new Employment Allowance of £2,000 for every employer from April 2014
- estimated that 450,000 of UKs SMEs will no longer pay employers NI contributions as a result
Capital allowances
- no major changes unveiled in budget
- Annual Investment Allowance increased from £25,000 to £250,000 on 1 January 2013 (for a temporary period of two years)
Low emissions vehicles
- extension of 100% FYA on low emissions vehicles to 31 March 2018
- CO2 threshold for FYA is 95 g/km from 1 April 2013
- threshold to be reduced to 75 g/km from 1 April 2015
- current examples: VW Polo BlueMotion 1.2 TDI (91 g/km); Toyota Yaris Hybrid T3 1.5 VVT-I (79 g/km)
Incorporated businesses
Corporation tax
- small profits rate to remain at 20% for the foreseeable future
- main rate of corporation tax to be aligned with small profits rate from 1 April 2015 at a rate of 20% (marginal rate and associated companies rules will be abolished)
Small loans exemption (benefit in kind)
- the small loans exemption limit will be doubled from £5,000 to £10,000 from April 2014 (relevant to tax-free loans made to employees)
Entrepreneurs relief (capital gains tax)
- gains on disposals of qualifying business assets subject to a reduced CGT rate of 10% (still)
- lifetime limit of £10m for each individual taxpayer
- normal requirement of 5% shareholding for ER to apply relaxed in the case of Enterprise Management Incentive (EMI) shares
Employer-provided cars (benefit in kind)
- from 6 April 2013 the CO2 emissions bands used to calculate employees taxable benefits on company cars will generally be reduced by 5 g/km
- the effect will be an increased charge of 1% x list price (to a maximum of 35% x list price) in calculating the value of the employee benefit
- from 6 April 2014 a further increase of 1% x list price for all vehicles with emissions over 75 g/km will be introduced
Employee-shareholder contracts
- employees given shares in their employers company in exchange for giving up certain employment rights
- each employee who agrees to this will receive a minimum of £2,000 and a maximum of £50,000 worth of shares in a company
- employer benefits from a relaxation in employment rights (in respect of unfair dismissal, redundancy and the right to request flexible working hours and time off for training), as well as increased employee participation
- for employees, shares up to a value of £2,000 will be exempt from income tax and NI contributions and gains on shares acquired will be exempt from capital gains tax. Employees will also benefit from acquiring a stake in the company and the chance to have a say in its management
Growth Vouchers
- new Growth Vouchers scheme to be introduced in order to provide further assistance to SMEs in England:
To provide further support for SMEs, the Government will provide £30 million for a Growth Vouchers programme in England. This programme will test a variety of innovative approaches to helping SMEs overcome barriers to achieving growth, such as limited use of external advice. It will target a number of specific areas of advice such as making a successful loan application to a bank or taking on an employee.