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Budget Report March 2013

Budget Report March 2013. John Richards Anthony Andreasen Richard Humphreys. The Tax Landscape. Vs. Evasion. Avoidance. The Tax Landscape. Offshore Evasion. International Action Disclosure Facilities. Tax Avoidance. Publicity GAAR. The Tax Landscape. The Tax Landscape.

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Budget Report March 2013

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  1. Budget Report March 2013

  2. John Richards Anthony Andreasen Richard Humphreys

  3. The Tax Landscape Vs Evasion Avoidance

  4. The Tax Landscape Offshore Evasion • International Action • Disclosure Facilities Tax Avoidance • Publicity • GAAR

  5. The Tax Landscape

  6. The Tax Landscape Offshore Evasion • International Action • Disclosure Facilities Tax Avoidance • Publicity • GAAR

  7. The Tax Landscape

  8. The Tax Landscape Offshore Evasion • International Action • Disclosure Facilities Tax Avoidance • Publicity • GAAR

  9. General Anti Abuse Rule Effective from Royal Assent Target Abusive Tax Arrangements Cannot be Reasonably Regarded as a Reasonable Course of Action Advisory Panel

  10. Statutory Residence Test Automatic Tests Sufficient Ties Test

  11. Statutory Residence Test Resident in UK 1 or more of previous 3 Tax Years and Spend < 16 Days in UK Overseas Test Not resident in any of previous 3 Tax Years & Spends <46 Days in UK in the Current Tax Year Full Time Work Overseas but <90 Days in the UK & <30 Days Work in UK

  12. Statutory Residence Test >183 Days in UK UK Test Main Home in UK used > 30 Days Works Full Time in UK for 365 Days

  13. Statutory Residence Test UK Test Family Ties Work Tie Accommodation Tie 90 Day Tie Country Tie

  14. Income Tax Rates & Allowances 2014/15 2012/13 2013/14 £8105 £10000 £9440 Psnl All (basic) 10% Rate - Savings £2710 £2790 20% £0 /£34370 £0 /£32010 £0 /£31865 40% >£34370 >£32010 >£31865 45% >£150000 >£150000 50% >£150000

  15. Personal Allowance 2012/13 >£100000 >£116210 >£100000 >£118880 2013/14 Abatement £1 for £2 NIL

  16. Effective Rate of Tax on Dividends 2013/14 2012/13 Basic Rate Nil Nil Higher Rate 25% 25% Additional Rate 36.11% 30.6%

  17. National Insurance 2013/14 2012/13 £109 pw £107 pw LEL – Class 1 £797 pw £817 pw UEL – Class 1 Primary/ Secondary Threshold £149/£148 pw £146/ 144 pw 12% 12% PT – UEL: Class 1 2% 2% UEL: Class 1 13.8% 13.8% Ers ST: Class 1

  18. National Insurance 2012/13 2013/14 £2.65 pw £2.70 pw Class 2 £13.25 pw £13.55 pw Class 3 9% - 2% 9% - 2% Class 4 £7605 - £42475 £7755 - £41455 Class 4: LPL - UPL

  19. Income Tax and National Insurance Impact Gross Income 2013/14 2014/15 2012/13 £20k £3580 £3870 £3,450 £50k £14,040 £14,220 £13,860 £120k £47,210 £46,870 £47,260 £200k £83,310 £85,470 £83,360

  20. Child Benefit Charge Partner or Taxpayer Earning >£50,000 1% of Benefit Charged for every £100 > £50,000

  21. Child Benefit Charge Partner Married Couple Living Together Civil Partners Living Together Couples of Either Sex Living Together Income Losses Total Income Less Pension Contributions Gift Aid

  22. Child Benefit Charge Example 2 Children = Benefit £1752 Income £54,000 Charge £17.52 x 40 =£700.80 Income over £60,000 = Charge of £1752.00

  23. Budget Report March 2013

  24. Corporation Tax 2014/15 2013/14 2015/16 2012/13 20% 20% First £300k 20% 20% TBC 20% Next £1.2mil 23.75% 25% 21% 20% Over £1.5mil 23% 24%

  25. Associated company Small Profits Rate £300k £150k £150k Company Company

  26. Example Single Company Taxable Profit £500k 2012/13 2013/14 £60000 £60000 20% First £300k 20% £50000 £47500 25% Balance 23.75% £110000 £107500 TAX Saving £2500 on 2012/13 2015/16 Saving £7500 on 2013/14

  27. Profit Extraction Salary 2013/14 Dividend 2013/14 £5292 £7625 £5719 £5096 £8787 £4657 £10k £10k Effective Tax Rate 42.8% / 47.1% Effective Tax Rate 49% / 53% £2333 £3691 £4130 £1906 £2375 £1213

  28. Profit Extraction Salary 2015/16 Dividend 2015/16 £4657 £8000 £5096 £6000 £8787 £5552 £10k £10k Effective Tax Rate 40% / 44.5% Effective Tax Rate 49% / 53% £3691 £2000 £4130 £2448 £1213 £2000

  29. Profit Extraction 2015/16 2013/14 High Rate Tax Payer 42.8% 40% Dividend 49% 49% Salary Additional Rate Tax Payer 47.1% 44.5% Dividend 53% 53% Salary

  30. Capital Allowances Plant & Machinery 2011/12 £200k 20% £100k £100k £80k £120k Allowance

  31. Capital Allowances Plant & Machinery 2012/13 2011/12 £200k 18% 20% £25k £143.5k £175k £100k £80k £56.5k Allowance £120k Allowance

  32. Capital Allowances Plant & Machinery 2013/14 2011/12 £200k 2012/13 18% 20% £25k £143.5k £100k £200k £80k £200k Allowance £120k Allowance £56.5k Allowance

  33. Seed Enterprise Investment Scheme Income Tax Relief @ 50% Extension of Capital Gains Tax Exemption on Gains Made in 2013/14 when Reinvested Disposal of SEIS Shares Exempt from CGT £100k pa Investor Limit Company Investment Limit of £150k in Total

  34. Enterprise Investment Scheme Rate of relief 30% Individual maximum £1M < 250 employees Gross assets before investment £15M Maximum investment in 12 months £5m

  35. SEIS / EIS Comparison SEIS EIS Investor Limit £100k pa £1m pa £5m pa £150k Total Company Limit Assets <£15m New Company Assets <£200k Qualifying Company <250 Employees <25 Employees 4 Months Trading Spend 75%

  36. Enterprise Management Incentive Scheme Limit on Unexercised Options to increased from £120k to £250k 6 April 2013 Entrepreneurs Relief 5% Shareholding Requirement EMI Schemes 12 Month Holding Requirement

  37. Budget Report March 2013

  38. Employee Shareholder Status Reduction of Income Tax on Acquisition of Shares by £2000 1st Sept 2013 Deem Base Cost £2000 Exempt up up £50000 Capital Gains on Sale of Shares

  39. Employment Allowance April 2014 £2000 Allowance against Employers Class 1 NIC

  40. Inheritance tax Nil rate band £325,000 Frozen until 5/4/18 Tax Rate on Excess 40% (36%)

  41. Inheritance tax 6th April 2013 No Limit Current Transfer Threshold £55000 Increased to £325000 Changes to Rules on Allowable Deductions

  42. Budget Report March 2013

  43. Employee Related Loans Currently No Tax Charge on Loans of Less than £5000 made to Employees 6th April 2014 Increase to £10000

  44. Capital Allowances - Cars Current Emission Threshold 160 g/km If exceeded 8% writing down allowance If lower 18% writing down allowance

  45. Capital Allowances - Cars From April 2013 Emission Threshold 130 g/km With Same Writing Down Allowance New Reduced Threshold also Applies to Leased Cars 100% FYA Extended on Low Emission Cars Under 95 g/km to 31/3/18

  46. Car Benefits 0% Company Car Benefit on Electric Cars withdrawn From 2015 0-50 g/km 5% 51-75 g/km 9% Upto 94 g/km 13% All other bands increase by 2%, Capped at 37%

  47. Car Benefits 3% Diesel Supplement abolished From 2016 All other bands increase by 2%, Capped at 37%

  48. Approved Mileage AllowancePayments 45p per mile 0 – 10,000 25p per mile 10,000 miles + 5p per mile Passengers If company only reimburses part, tax relief can be claimed on balance

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