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Budget 2012 Sar V.1
- 1. Budget 2012 FrancisClark LLP 22 March 2012
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- 3. Personal Tax -Contents • Personal Allowances and Related Issues • 50p Rate • Capital Gains Tax • Other Personal Tax Measures • EIS and SEIS • SDLT Avoidance • IR35 • Employee share ownership • Inheritance Tax • Booze, Fags & Petrol
- 4. Personal allowances andrelated issues • The Government is committed to increasing the personal allowance to £10,000 by 2015 • Increase to £8,105 for 2012/13 • £9,205 for 2013/14 • Corresponding adjustments to the basic rate band
- 5. Income Tax Thresholds Basicrate threshold 2011-12 £35,000 2012-13 £34,370 2013-14 £32,245 Additional rate threshold £150,000
- 6. The End ofthe 50p Rate from 6 April 2013 • £16bn of income advanced in 2010 – not forecast by Labour • Raised £1bn when £3bn was expected and forecast • Other measures to cover measure
- 7. Capital gains tax Currentsituation • Annual exemption remains £10,600 • Entrepreneurs’ relief - 10% on the first £10m of gain • Basic rate taxpayers taxed at 18% on gains over the annual exemption up to the limit of the basic rate band • Gains made by higher rate taxpayers are taxed at 28%. • Foreign currency bank accounts to be removed from the charge to CGT from 6 April 2012
- 8. Other Personal TaxMeasures • Statutory residence test delayed until April 2013 • Non-dom investment relief begins April 2012 • Income tax charge on child benefit from 7 January 2013 where either partner has income over £50k • From 2013 cap on unlimited reliefs of over £50,000. 25% maximum shelter
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- 10. Enterprise Investment Scheme(EIS) changes • Rate increased to 30% from last April From 6 April 2012: • Increase in max size of qualifying company for both EIS to £15m and <250 employees • Max amount which can be invested in an individual company increased to £10m • Annual limit on investment for an individual is £1m • Connection via a holding of 30% of loan capital is removed • Qualifying shares can now include shares with certain preferential rights to dividends • The definition of qualifying trades has been amended to exclude businesses based on feed in tariffs for electricity generation
- 11. Seed Enterprise InvestmentScheme(SEIS) • Investments made on or after 6 April 2012 for five years • 50% income tax relief is given on qualifying investments, whatever your marginal rate of tax – tax credit to reduce tax bill • For one year only in 2012/13 where gains are reinvested in SEIS shares the original gain will be exempted, rather than deferred • 78% tax relief in 2012/13! • Capital gains tax is not charged on disposal (conditions include hold for three years) • Income tax relief will be withdrawn on the same basis as for EIS if the shares are not held for at least 3 years • Relief can be claimed in prior year
- 12. Seed Enterprise InvestmentScheme(SEIS) • £150,000 maximum raise per company • Gross assets must not exceed £200,000 immediately before the investment is made • No EIS or VCT investment must have been made before the issue of SEIS shares • Fewer than 25 full time employees • The trade must be a genuine new trade and only within two years of incorporation • 70% of the funds raised must have been spent on qualifying activities • Maximum annual investment of £100,000 per investor • The investor must not own more than 30% of the company or be an employee • Usual plethora of conditions about qualifying trades and disqualifying events
- 13. Personal Service Companies •New package of measures aimed at PSCs • HMT suggested that PAYE could be collected on payments to PSCs • Consultation process to follow
- 14. Employee Ownership • NickClegg’s big vision • Previously EMI option holders unlikely to get entrepreneurs relief • This will be changed going forwards • EMI allowance increase from £120k to £250k
- 15. SDLT Avoidance • Propertiespurchased or bought in a company now targeted with high rates of SDLT • Applies to properties with a value in excess of £2m • Immediate effect
- 16. Inheritance tax • Nilrate band is currently frozen at £325,000 until 2015 • New rate of 36% from 6 April 2012 where at least 10% of the estate is given to charity.
- 17. Booze, Fags andPetrol • Beer up 3p a pint • Cider up 3p a litre • Wine up 11p a bottle • Spirits up 41p a bottle • Cigarettes up 37p a pack • Cigars up 12p a tin • Petrol no change
- 18. Corporate & BusinessTaxes
- 19. Corporate & BusinessTaxes - Contents • Corporation tax rates • Capital allowance changes • R&D • Patent box • Video Game & Animation relief • ESC C16 • Overseas issues • GAAR • National Insurance • VAT
- 20. Corporation tax rates 2010/11 2011/12 2012/13 2013/14 2014/15 First 21% 20% 20% 20% 20% £300,000 Upper rate 28% 26% 24% 23% 22% on £1.5m • Note - bands subdivided by number of associates • Main rate will reduce to 22% by 1 April 2014 (lowest rate UK has ever known)
- 21. Capital allowance changes FromApril 2012 • WDAs reduced to – 20% to 18% for plant & machinery – 10% to 8% for integral features • AIA down to £25,000 from £100,000 • No 100% ECAs on assets in respect of which the feed-in tariff (FIT) or renewable heat incentive (RHI) is received • Expenditure on solar panels will only qualify for CAs at 8% (not 18%) • Business Premises Renovation Allowance – extended to 2017 • Flat conversion allowance - 100% relief ends April 2013
- 22. Capital allowance changes CapitalAllowances For Plant Fixtures from April 2012 • Purchaser and all future owners of the property could forfeit entitlement to claim on any plant fixtures unless done properly • Allowances can be in the region of 10% - 30% of the purchase price of a property • The current rules allow a property owner to claim capital allowances at any time whether or not any previous owner has made a claim • Fundamental need for tax DD on property acquisitions and advice on disposal
- 23. R&D From 1 April2012 • SME rate 225% from 200% • Repayable R&D credits for loss making SMEs reduced from 12.5% to 11% • Remove PAYE/NIC Cap CTAPs ending on or after 1 April 2012 • Remove £10k minimum claim limit from 2012 or after 1 April 2012 • Move to 'above the line' tax credit system from 2013
- 24. Patent box • Corporationtax rate of 10% on the exploitation of patents and some other intellectual property • From 1 April 2013 • Phased in from 2013; full benefit from 2017 • Deduction calculated to reduce the tax to 10% on relevant income • Elect in • Includes patents granted by certain other EU national patent regimes, the UK Intellectual Property Office and the European Patent Office • Can claim 10% rate on profits for six years prior to the grant • No special regime for SMEs
- 25. Video Game &Animation Relief • Applies to the ‘creative sector’ • Similar to film tax credits • Consultation to follow • Effective 1 April 2013
- 26. ESC C16 • Nolonger exists; legislated with amendments • Winding up unwanted company value below £25,000 • No clearance required - capital • Winding up unwanted company value above £25,000 • Liquidation costs
- 27. International Issues • CFC reform - new ‘gateway test’ • CFC reform - HMRC guidance essential • Update to the foreign branch exemption rules • Consultation on ToAA and s.13 TCGA
- 28. Tax Avoidance ‘I regard tax evasion and indeed aggressive tax avoidance as morally repugnant.’ George Osborne – Chancellor 21 March 2012
- 29. General Anti-Avoidance Rule- GAAR • Economic & political climate • Graham Aaronson QC • Double reasonableness test • Clearance procedure • Avoidance or mitigation • Impact on cost of advice
- 30. National Insurance Holiday •‘NIC holiday’ for small start-up companies taking on new employees – • Far less take up than the Chancellor originally predicted (12,827 as at 16 February 2012) • Local geography is important
- 31. Value Added Tax- Thresholds • VAT registration threshold £77,000 from 1 April 2012 (currently £73,000) • Deregistration threshold £75,000 from 1 April 2012 (currently £71,000) • Fuel scale charges – new rates from 1 May 2012
- 32. Value Added Tax- Admin • All VAT returns to be filed online from 1 April 2012 • All VAT registrations, deregistrations and variations to be online from 31 October 2012 • The VAT threshold for businesses not established in the UK will be removed from 1 December 2012
- 33. Value Added Tax- Avoidance HMRC have proposed to address anomalous VAT borderlines by applying VAT to the provision of: – Self storage facilities – Approved alterations to listed buildings – Catering – Sports drinks – Holiday caravans – Rental of hairdressers’ chairs
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