Oxford Office - 01865 552 925  |  Witney Office - 01993 776 476 team@themgroup.co.uk

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


  • 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

Employer’s NI contributions

  • new Employment Allowance of £2,000 for every employer from April 2014
  • estimated that 450,000 of UK’s SMEs will no longer pay employer’s 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 employer’s 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.”


The MGroup

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