Team Bennetts

Just a reminder that from April 2014 the first £2,000 of employers NI is exempt. Directors of limited companies currently drawing salary at the NI threshold may benefit from increasing their salary. Please contact us for guidance.

The allowance will be claimed through the EPS as part of normal payroll procedures.

Income Tax and National Insurance – please see our pre-budget update.

Corporation Tax – from 1.4.14 the small companies rate remains at 20% (on the first £300k of profits). The large companies rate drops from 23% to 21% from 1.4.14, and 21% to 20% from 1.4.15. Large companies are those where profits exceed £1.5m. There are marginal rates of tax on profits between £300k and £1.5m.

VAT – from 1.4.14 the registration limit increases from £79k to £81k.

Capital Allowances – the annual investment allowance will increase from £250k to £500k in April 2014 but is planned to drop to £25k in January 2016. Writing down allowances remain at 18% (main rate including cars with 96-130g/km) and 8% (lower rate including cars over 130g/km). Cars up to 95g/km will attract 100% first year allowance.

Capital Gains Tax – the annual allowance for individuals increases to £11,000 from April 2014. The CGT rates remain the same at 18% (or 28% for gains above the basic rate band). The entrepreneurs relief rate stays at 10% for the sale of businesses for the first £10m of lifetime gains.

Inheritance Tax – the nil rate band of £325k (£650k for married couples and civil partners) remains the same. The rate of tax remains at 40%.

Business Mileage – rates remain the same at 45p/mile for the first 10,000 miles and 25p/mile on the excess.

ISA’s – from 1.7.14 the limit will be £15,000 per annum.

Pensions – from April 2015 individuals will not have to buy an annuity and will have freedom in how they access their pension pot.

Following the Autumn Statement and subsequent releases changes for the tax year 2014/15 have been outlined as below

National Insurance Contributions

Self-employed class 2 will be £2.75 per week

Self-employed class 4 will be payable between £7956 and £41865 at 9%, above £41865 the additional rate is payable at 2%

Employee’s class 1 is due between £153 to £805 per week at 12%, above £805 per week the additional rate is payable at 2%

Employer’s class 1 is due above £153 per week at 13.8%

Note: From April 2014 the first £2000 of employers NI is exempt from payment.

It has also been proposed that from April 15 employers will not have to pay the employer’s class 1 NICs on the wages of employees aged under 21 where the employee earns less than £813 per week.

Sick Pay Support

Currently employers can recover statutory sick pay (SSP) paid to employees where the total paid exceeds 13% of total class 1 NICs of the same month. This is to be abolished from 6 April 2014 therefore making SSP an unrecoverable cost for all employers.

Income Tax Allowances

The standard personal allowance will increase to £10,000

The personal allowance for those aged 65-74 will remain at £10,500

The personal allowance for those 75 and over will remain at £10,660

Note: The age related allowance will reduce to the standard allowance if total income exceeds £27,000.

The income tax bands will be as follows

Basic rate (20%) up to £31,865 (over personal allowance ie £41,865 in total)

Higher rate (40%) from £31,866 to £150,000

Additional rate (45%) over £150,000

Note: The personal allowance will again reduce where income exceeds £100,000

Married Couples Allowance

From April 2015 married couples and civil partners will be able to transfer up to £1000 of their personal allowance to their spouse but this can only be applied if both members of the couple are basic rate taxpayers or pay no tax in the year.

Capital Gains Tax

Where you sell a property that has at some point in time been your main home any gain on the period occupied is free from tax as is the the last 36 months of ownership. From 5 April 2014 any disposals made will only receive a final tax free period of 18 months.

Once the budget has been announced on the 19 March 2014 our normal update will be made with any revisions.

Please be aware of emails purporting to be from HMRC stating you are entitled to a tax refund.

HMRC do not advise any tax position by email so please be very cautious of any email of this nature.

HM Revenue & Customs has created 4 more tax investigation task forces including 2 based around the Midlands.

1 – Individuals living beyond their means

2- Anyone dealing in second hand cars

The latest minimum wage rates are as follows:

Age 16-17 £3.72 per hour

Age 18-20 £5.03 per hour

Age 21+ £6.31 per hour

Apprentice rate £2.68 per hour