Newsletter issue - December 2012.
The main tax rates, thresholds and allowances as they have been announced in the Autumn Statement and subsequent releases for the tax year 2013/14 are summarised below.
Income Tax
| Personal allowances | £ |
| Born on or after 5 April 1948 | 9,440 |
| Born between 6 April 1948 and 5 April 1938 | 10,500 |
| Born on or before 6 April 1938 | 10,660 |
| Minimum marriage allowance | 3,040 |
| Maximum marriage allowance | 7,915 |
| Blind person's allowance | 2,160 |
| Income limit for age allowances | 26,100 |
| Income limit for all personal allowances | 100,000 |
The level of personal allowance is now tied to the taxpayers' year of birth, not to his or her age in the current tax year. The marriage allowance is only available to taxpayers born before 6 April 1935, and is given as reduction in tax at 10% of the allowance value.
| Income tax rates | Dividends | Other income | Band £ |
| Savings rate* | 10% | 10% | 0 to 2,790 |
| Basic rate | 10% | 20% | 0 to 32,010 |
| Higher rate | 32.5% | 40% | 32,011 to 150,000 |
| Additional rate | 37.5% | 45% | Over 150,000 |
* Not available if non-savings income exceeds the savings rate threshold.
National Insurance
| Class: | Weekly earnings | Rate |
| Employer's class 1 above primary threshold | Above £148 | 13.8% |
| Employee's class 1 not contracted out | From £149 to £797 | 12% |
| Employee's additional class 1 | Above £797 | 2% |
| Married woman's rate* | From £149 to £797 | 5.85% |
| Self-employed class 2 | - | £2.70 |
| Share fishermen class 2 | - | £3.35 |
| Volunteer development workers class 2 | - | £5.45 |
| Class 3 | - | £13.55 |
| Annual profit thresholds | ||
| Small earnings exemption class 2 | £5,725 | - |
| Self-employed class 4 | From £7,755 to £41,450 | 9% |
| Self-employed class 4 additional rate | Above £41,450 | 2% |
*only available for women who made a valid married woman's election before 11 May 1977.
Company Cars and Vans
The tax charge for the private use of a company car is based on a percentage of the list price of that car when new, as read-off the table of the vehicle's CO2 emissions.
For 2013/14 and 2014/15 a 5% list price band applies to cars with CO2 emission not exceeding 75g/km.
In 2013/14 the 10% list price band applies to cars with emissions of 76-94g/km, and one percentage point is added for every 5g/km of CO2 emissions, but in 2014/15 the 11% of list price will apply to these 'entry level' cars. From 6 April 2015 the lowest percentage of list price will be 13%, and from 2016 the minimum percentage of list price increases to 15%.
Fuel benefit
Where a company car driver receives free fuel, the taxable benefit is calculated as the percentage of the list price for the car applied to a set value, currently £20,200. This will rise to £21,100 from 6 April 2013. The taxable benefit when fuel is provided for private use in a company van will increase to £564 for 2013/14.
Capital Gains Tax
| Tax rates | Individuals | Trusts |
| Up to basic rate band | 18% | 28% |
| Above basic rate band | 28% | 28% |
| Annual exemption 2013/14* | £10,900 | £5,450 |
| Annual exemption 2014/15 | £11,000 | £5,500 |
| Annual exemption 2015/16 | £11,100 | £5,550 |
* Not confirmed.
Tax Credits
| Working tax credit | £ per year |
| Basic element | 1,920 |
| Couple and lone parent element | 1,970 |
| 30 hour element | 790 |
| Disabled worker element | 2,855 |
| Severe disability element | 1,220 |
| Child tax credit | |
| Family element | 545 |
| Child element | 2,720 |
| Disabled child element | 3,015 |
| Severely disabled child element | 1,220 |
| Income thresholds and withdrawal rates | |
| Income threshold | 6,420 |
| First threshold for child tax credit | 15,910 |
| Income rise disregard | 5,000 |
| Income fall disregard | 2,500 |
| Withdrawal rate | 41% |
All of the above figures are frozen at the 2012/13 rates (which were also frozen at 2011/12 rates), except for the disabled and childcare elements. The amount of childcare cost that can be claimed as a deduction is capped at £175 per week for one child or £300 per week for two or more children, and up to 70% of the child care costs can be covered.
Tax credits will be replaced by Universal Credits for new claimants from October 2013. Existing tax credit claimants will be gradually moved to the new system over four years.
ISAs
| Savings made by: | Overall limit | Cash up to: | Balance in stocks and shares up to: |
| Adults over 18 | £11,520 | £5,760 | £11,520 |
| Aged 16 & 17 | £5,760 | £5,760 | - |
| Under 18 in Junior ISA | £3,720 | £3,720 | £3,720 |
| Child trust fund limit | £3,720 | £3,720 | £3,720 |
Pensions
In spite of much speculation about a reduction in tax relief for contributions to registered pension schemes, there has been no change in the tax relief rates or annual allowance for 2013/14.
Each individual has a personal annual allowance of £50,000 (for 2013/14), which is expanded by any unused annual allowance brought forward from the previous three tax years. If the value of the pension contributions deemed to be made (by both employee and employer), exceed the taxpayer's available annual allowance, an annual allowance tax charge applies on the excess contributions, set at the taxpayer's highest rate of income tax.
The lifetime allowance is the maximum value of the pension savings from which a tax free lump sum can be taken on retirement. If the lifetime allowance is exceeded when the taxpayer starts take their pension benefits, part of those pension benefits are subject to a lifetime allowance charge. As the lifetime allowance is to be reduced from 6 April 2014, affected taxpayers can elect to fix protection on their current pension pots which already exceed £1.25 million.
| Tax year: | 2013/14 | 2014/15 |
| Annual allowance | £50,000 | £40,000 |
| Lifetime Allowance | £1,500,000 | £1,250,000 |
Inheritance Tax
The value of a person's estate that is free of inheritance tax is called the nil rate band. This has been frozen for five years to 2015.
| Deaths in tax year: | 2013/14 | 2014/15 | 2015/16 |
| Nil rate band | £325,000 | £325,000 | £329,000 |
Corporation Tax
| Taxable profits | From 1 April 2013 | 1 April 2014 |
| £0 - £300,000 | 20% | 20%* |
| £300,000 - £1,500,000 | 25% | TBA* |
| £1,500,000 and over | 23% | 21% |
* to be confirmed at Budget 2013
Capital Allowances
The Annual Investment Allowance (AIA) has been increased to £250,000 but only for qualifying expenditure incurred in the two years from 1 January 2013. Where the accounting period straddles 1 January 2013 the AIA is restricted to the relevant proportion of the AIA cap in place for periods before and after 1 January. Great care must be taken to ensure that the expenditure falls in the correct period to use the AIA cap available.
| Period: | 1 April 2011 to 31 March 2012 | 1 April 2012 to 31 December 2012 | 1 January 2013 to 31 December 2014 |
| Main pool: writing down allowance | 20% | 18% | 18% |
| Special rate pool: writing down allowance | 10% | 8% | 8% |
| Annual Investment Allowance (AIA) cap: | £100,000 | £25,000 | £250,000 |
Annual Residential Property Tax
This is a new tax which will apply to residential properties in the UK valued at £2 million or more, which are owned by:
- a company,
- other corporate body,
- collective investment vehicle such as a unit trust; or
- a partnership which includes one or more of the above as a member.
There will be exemptions for properties which are not dwellings (such as boarding schools, hospitals), are used for business or charitable purposes or are open to the public.
The tax will be charged at the following rates for 2013/14 with the first payment due by 31 October 2013.
| Property Value | Annual Tax |
| £2 million to £5 million | £15,000 |
| £5 million to £10 million | £35,000 |
| £10 million to £20 million | £70,000 |
| £20 million and over | £140,000 |